Parliament has passed the Deposit Protection Bill, 2015 to protect depositors from unforeseen circumstances that may result in loss of funds.
The bill follows recent debacle that hit the microfinance sector resulting in customers of DKM Microfinance and God is Love Fun, among others losing millions of Ghana cedis.
The bill is expected to receive presidential assent for it to become law after which the Bank of Ghana (BoG) will operationalize it.
According to the bill, depositors whose monies get locked up in banks may receive up to GHS 6,250 in compensation while customers of other financial institutions during crisis may receive up to GH1,250 in compensation.
This will be paid by the Deposit Protection Fund Corporation.
Explaining some aspects of the legislation, Finance Minister, Seth Terkper stated the new legislation will aid the BoG in its regulation of the space for small depositors in the financial sector.
He stated that the law will protect anybody with a savings or current account who deposit money in the bank.
“Now we all heard about the global financial crises where because of certain developments in the banking and financial sector a lot of depositors lost their money,” he recalled.
Mr. Terkper stated that with the new legislation, government can step in at some point in time to protect depositors.
Calls to strengthen BoG’s internal mechanism
Meanwhile, Member of the Finance Committee and MP for New Juaben South, Dr Mark Assibey Yeboah said the BoG will have to strengthen its internal mechanisms to be able to apply the new legislation properly.
“ The banks and specialized deposit taking seeks to tighten the supervisory role of the bank and also to rope in a lot of the things which went unchecked,” he assured.
“So when that has been passed, I think we will see some tightening. But I think the bank has to recruit some more staff into their banking supervision,” he added.
Touching on the number of institutions that must supervised by the BoG to make the law effective, Mr. Assibey Yeboah urged the central bank to properly oversee rural banks, microfinance, and saving and loans.
“We have so many rural banks that must be supervised. We have tons of micro finance institution, savings and loans institutions and they must all be properly supervised,” he warned.
He cautioned that with the current staff strength of the BoG it will require a lot of work to scrutinize activities across the ten regions hence, the need to tighten the licensing regime.
By: Duke Mensah Opoku/citibusinessnews.com/Ghana