Mr. Banjamin Efful Eshun, Chief Executive Officer of one of the leading rural banks in the Western Region, Ahantaman Rural Bank Limited, has revealed that the Bank of Ghana (BoG) is set to soon roll out the Ghana deposit protection scheme. The scheme, when finally rolled out, will guarantee the safety of deposits by customers. This comes in the wake of the recent collapse of some insolvent financial institutions.
The insurance has been made mandatory, following the passage of the Ghana Deposit Protection Act 2018, Act 931. Mr Benjamin Afful Eshun believes savings of customers will be safer under this act, in the case of institutional failure especially for depositors who have little or no knowledge about banking operations.
“We need the financial system for the economy to function. For that, a healthy financial system is required, and that is what the Bank of Ghana has sought to do, which was completed last week with the closure of the twenty-three savings and loans and other finance houses.
“There is going to be a program which will take off from September. It is called the Ghana Deposit Protection Scheme. It is a scheme by which all institutions will be required to pay a premium when they take monies of customers. It is like an insurance, that will be paid to be put into a fund so that in future should any of the institutions that have been certified as healthy go down, that money will be there to pay depositors.
“In September 30th, when the scheme takes off, we will know that we are insuring healthy institutions. Confidence should be increased in the financial system,” he indicated.
He says there have been several warnings by the Bank of Ghana to these banks with the hope that depositors’ savings will be safe, however such warnings proved futile. He is advising customers of other banks which have been declared healthy to exercise restraint and not to resort to panic withdrawals.
“I will implore the general public to stay calm, we shouldn’t rush to do any panic withdrawals from those institutions that have not been mentioned.
Explaining why the BoG did not move to close the defaulting financial institutions when they realised, form their routine investigations at these institutions, that they were not obeying the basic guidelines that sets them up, Mr. Afful Eshun said per the processes that govern banking, the BoG had to give the savings and loans companies the opportunity to rectify their mistakes. This, he said, the BoG did satisfactorily, according to their own statement.
“From the statement issued, you will find out that the Bank of Ghana had been in contact with the shareholders and directors. For some of them, when they saw that their net weight was negative, they were asked to inject more capital to bring it to a healthy status, but they didn’t do it.
“You don’t go one day and say that I have inspected and you have defaulted in this area so we will collapse the institution. All institutions cannot fulfill the condition 100%, so when you are falling down by your prudential returns, then they advise,” he stated.
Mr Afful-Eshun reiterated that the Bank of Ghana does quarterly report on the health of financial institutions and prescribe solutions to challenges they (BoG) find with their (financial institutions) operations.
“Every quarter, there is an offsite report that is sent to banks. They will go through your returns and ask questions on how the bank is fairing and advise them to improve in specific areas if they are lacking. During the next quarter, they check to see if there are any improvements or not. It is only after such things have gone on for some time that you can say that now there is no hope for you, therefore, we have to revoke your license,” Mr Afful Eshun noted.
Story: Eric Nana Gyetuah/Skyy News/Takoradi.