The Association of Savings and Loans Companies is encouraging its members to make adequate provisions to recapitalize in order to avoid sanctions by the Bank of Ghana.
Savings and Loans companies are currently operating with a minimum capital of 7 million cedis which is expected to be increased by the central bank as part of sanitizing the sector and building stronger institutions.
A similar exercise in the banking sector is expected to end by December 31, 2018.
The call from the Association of Savings and Loans is premised on concerns that some members may be caught up being unable to meet the requirement which will trigger an action from the Bank of Ghana.
The Association’s Executive Secretary, Tweneboah Koduah believes depositors may be affected indirectly hence the need to avert any inconveniences.
In an interview with Citi Business News, he highlighted how Savings and Loans companies could strategise on meeting their new capital levels.
“Capitalisation is a conscious effort that every institution which has met the regulatory requirement will have to decide whether it would want to go beyond it or open up the shareholding structure such that more shareholders come into the business,”
“It is a regulatory issue that must be looked at; it also about business rationale as well as risk management framework where the company uses its own funds or external funds to manage risks.”
The Savings and Loans sector has been faced with instances of panic withdrawals where some depositors have had difficulty in accessing their matured investments, or daily cash withdrawal needs.
In some cases, the affected companies have had to take some drastic decisions like suspending operations for days, weeks or even months.
In all, the central bank has indicated that it will extend its tentacles to the savings and loans sector and crack the whip on non-compliant institutions.
A decision Mr. Koduah says the association is in full support of.
“We know that the central bank is doing a lot of things to ensure that we get the best out of the system…the financial institutions are also giving the necessary support,” he stated.
“At the end of the exercise, every institution that comes out is going to be far better, customers are going to get better services and products to be churned out by these institutions are going to be better than they used to be,” Mr. Koduah added.
By: Pius Amihere Eduku/citibusinessnews.com/Ghana