BoG bars MFIs from digital space until they pass ‘test’  

The Central Bank
Bank of Ghana

Microfinance companies interested when introducing digital products and services, including agency banking and mobile money, must first meet the central bank’s ‘fit and proper test’ including GH¢2million minimum capital.

Head of Payment Systems at the central bank, Dr. Settor Amediku, told players in the Microfinance space at the annual general meeting of the Ghana Association of Microfinance Companies (GAMC) that to enter the digital and payment eco-system they need to meet the BoG’s minimum prudential and regulatory requirements.

Without meeting the ‘fit and proper test’, he said, microfinance companies will not be allowed to undertake certain activities.

“Every product that you need to deliver has to be approved by the central bank. For example, if you want to undertake agency banking, digital savings, credit products, you need to write to us,” he added.

Despite banks taking the lead in introducing digital banking channels and payment products and services, Dr. Amediku noted that with only 58 percent of Ghanaians classified as financially included, institutions such as microfinance companies have an opportunity to take advantage of the eco-system.

He said the Payment Systems and Services bill, drafted in consultation with other stakeholders, has been approved by Cabinet and is heading to Parliament for passage. “When it is passed, it will allow the legal and regulatory framework to evolve,” he added.

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Optimism at extended deadline

In 2015, the BoG increased the minimum capital for deposit taking and micro-credit companies from GH¢100,000 to GH¢2million, with a June 2018 deadline to it.

Data from the central bank indicate, however, that only 30 out of the 319 registered microfinance companies are in a position to meet the new requirement.

With more than 90 percent of the companies yet to meet the requirement, National Board Chairman of GAMC – Collins Amponsah-Mensah, noted that the association has held several meetings with the regulator, and the most likely outcome is an extension of the deadline.

“The deadline ended in June, but we are having engagement with them [the regulator] to see if there can be some extensions, and also some proposal which we think will have to be considered. We believe we should be able to reach a consensus. We are very hopeful that at the end of the day a win-win is what we will achieve,” Mr. Amponsah-Mensah said.

To ensure that members of the association operate within an enabling environment, Amponsah-Mensah noted that mergers and acquisitions have been proposed as part of the recommendations which have been made to the central bank.

“We don’t believe that everybody will need GH¢2million to do business. Some are doing business in rural zones and do not need so much to operate. We believe a tier-system will be best  for what is needed,” he added.

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Even though he acknowledged that the financial terrain has become difficult – with the collapse of some major banks and other financial institutions, he encouraged members to stay strong and keep operations under regulatory guidelines.

“Let us be careful not to do things that will compromise the sustainability of our businesses. Our clients need us to continue providing them with financial services. The nation needs us to support government in its development and social intervention agenda,” he said.

The Executive Secretary of the Association, Joseph Kwame Donkor, added that a lot of effort is still needed to restore public confidence in the industry, following cases of depositors losing their savings to acts of malfeasance in the microfinance space.

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