The Bank of Ghana (BoG) says it has given all savings and loans companies (S&Ls) up to the end of July this year to publish their accounts, or face the monetary sanctions that comes with it.
"By July, we want everybody to publish their accounts so that the public will see how they are faring in their finances, and for people who intend to invest their money with them, to know whether they are making profits or not.â€
The clients need to know whether the companies: "loans are bad and that they are not doing well so they can take a decision on whether to reduce the amount of money they invest in the companies not. It just to inform the public on their performance, and that will also force the S&Ls to do the right thing, Head of Banking Supervision at the Bank of Ghanaâ€, Raymond Amanfu said.
Speaking to the B&FT on the sidelines of the 7th annual general meeting of the Ghana Association of Savings and Loans Companies (GHASALC), he said if a client is dealing with an S&L company, he must know what its performances so he will know that the company he/she is dealing with is doing well or not. That is the law; the law says that after every four months, publish your accounts. There are some who have come to say their auditors are delaying, and we have given them an extension, but we cannot give them perpetual extensionsâ€, he said.
He said failure on the part of the S&Ls to publish their accounts by end of July will attract monetary sanctions and they will pay the penalty from the end of July, till they publish the accounts.
He also urged the S&L companies to operate within their core mandate in which they were established.
He reminded them that they were set up on the background that there was a gap between the banks and the rest of the people who are termed as "economically active poor."
These people, he said, always do transactions with not so much cash and feel intimidated by the operations of the big banks.
As a result of this, he said the savings and loans companies were created to serve their banking needs for them to feel comfortable in engaging in transactions.
So, if later you want to go and do financing of 4-wheel vehicles for people, and also give people money to buy big mansions. Yes, they can do what they called micro housing scheme, but you don't go and give him GHȻ2million to go and build a house.
They (S&Ls) don't have such expertise to do that kind of business and then the money you take from the small clients, these are clients who do not want to keep their money there for too long. They keep their money anytime they want and take it anytime also; but you take money which is short term and then you go and give it to somebody for over 5years. So, they must move away from what the big banks have the capital to do, he said.
He said quite a number of S&Ls are doing well and are actually serving the purpose in which they were established, adding that, a few of them have moved away; but as a regulator when they find them going off, they have to bring them back to line.
Chairman of GHALSAC, Kofi Ampofo Agyapong, said last year the Association seen the issuance of regulatory orders, some of which were abrupt, perhaps an administrative guideline from specific departments of the Bank of Ghana, which have immensely affected members' operation greatly.
He said these regulatory issues together with limited innovation in the sector are the main factors that hindered the effective financial intermediation of the sector in the year under review.
By virtue of the tier position of the S&Ls' within the country's financial system, we believe that the savings and loans sector in principle was created by BoG to bridge the gap between the formal banking stream and the informal sector of the economy,†he said.
Source: Business and Financial Times