Some financial institutions have called on the Bank of Ghana(BoG) to clearly define the roles of financial institutions in the country to prevent some institutions from veering off their core mandate.
According to them, the move will streamline the operations of financial institutions to enhance inclusion and prevent debacles that may lead to loss of funds.
Speaking to Citi Business at the launch of the Ideal Sika Fund, the President of Groupe Ideal, Dr. Nii Kotei Dzani argued that some microfinance companies in the country are operating like banks.
He pointed out that the development is posing challenges in the financial sector, leading to loss of funds.
“One of the problems that we face as financial institutions in this country has to do with clear definition of the functions of various financial institutions. Now you realize that it is only the forex that differentiates a bank from a savings and loans company. I don’t see any difference even between the savings and loan and the microfinance companies anymore,” he said.
He stated that there are some microfinance companies operating without the required capital prescribed by the central bank.
“There are micro finance companies that do not even have the necessary capital and yet they operate like the banks, they operate like a savings and loans, and there are money lenders that work like finance houses,” he said appealing to the Bank of Ghana to sanitize the industry.
He warned that the situation is made dire due to the danger it poses to public funds particular and the industry in general.
“The investing public does not know this difference so what happens is that they treat all of us almost the same. So when there is one scrupulous micro finance company squandering people’s money, then we all get affected,” he said
Dr. Dzani who spoke to Citi Business News said the central bank must act soon to deal with the issue.
“It is a very big challenge and I think that the central bank should come out and act now.” he said.
He spoke to Citi Business News at the sidelines of the launch of the Ideal Sika Fund.
The Ideal Sika Fund
The fund is an open-ended money market mutual fund which seeks to provide regular income while preserving capital and maintaining liquidity by investing in fixed income securities and other money market instruments.
The fund is also offering a minimum of one million shares at twenty Ghana pesewas per share within the initial public offer period.
By: Jessica Ayorkor Aryee/citibusinessnews.com/Ghana