Banking Consultant, Nana Otuo Acheampong has called on financial institutions in the country to prioritize educating the public on the deposit protection scheme.
According to him, this will ensure its success as well as increase the confidence of customers in the banking sector.
The Ghana Deposit Protection Insurance Scheme was established to protect insured depositors against the consequences associated with the failure of banks or specialized deposit-taking institutions.
The scheme covers universal banks, savings and loans, finance houses, rural banks and microfinance institutions.
It also helps the Bank of Ghana to ensure the efficiency and solvency of the country’s financial system.
Even though the Ghana Deposit Protection Insurance Act was passed in 2016, it was not operationalized until Ghana experienced a banking crisis in 2017-2018.
Government spent nearly GHS2.2 billion in 2017 as a result of the collapse of Capital Bank and UT Bank in 2017.
An additional GHS7.9 billion was spent following the collapse of Royal Bank, uniBank, Sovereign Bank, Premium Bank and Heritage Bank.
The revocation of the licenses of 347 microfinance companies, 39 micro-credit firms, 15 savings and loan companies and 7 finance houses cost the taxpayer some GHS15.6 billion.
Government could have saved millions of this money if the scheme was operational before the banking sector clean up.
In an interview with Citi Business News, Nana Otuo Acheampong threw more light on the scheme and the laws governing it.
“The scheme operates under Act 930 where all the institutions which include the banks, savings and loans, finance houses, rural banks and microfinance institutions, so if a loss is incurred by which the Bank of Ghana evokes its right to resolve any of these five sets of institutions, then it means that institution can no longer operate”.
He added, “Therefore if your qualifying deposit is with a universal bank, then the maximum amount of money you will get will be GHS6,250 and this falls under fund A. For fund B the maximum you will get will be one thousand two hundred and fifty Ghana cedis which have to do with specialized deposit-taking institutions”.
Confidence in the banking sector has been gravely affected by the clean-up even as not all depositors have been reimbursed.
Nana Otuo Acheampong told Citi Business News that, he believes financial institutions together with the Ghana Deposit Protection Corporation must do more to educate the public about the existence of the scheme.
“It is very important for the public to know about the existence and operation of the scheme banks should therefore make public education on it a priority.”