Executive Secretary of the Ghana Association of Savings and Loans Companies (GHASALC), Tweneboah Kodua Boakye, has called for the justice system to carry more bite when dealing with loan defaulters.
Concerns have been raised about the lack of efficiency from the justice system in the wake of the financial sector crisis.
The Association of Finance Houses, for example, has warned that if Ghana’s legal system does not improve, the financial sector will still face challenges despite the clean up by the Bank of Ghana (BoG).
Speaking on the Point of View, Mr. Kodua urged the officials atop the legal system in Ghana to address the concerns.
“I support the call by the [BoG] governor; the justice system should be looked at. Financial institutions are suffering because when they grant loans and the customers are not paying, you take it to the court and there are delays and all that.”
“The Chief Justice and the Attorney General should look at how they can help speed up the process. We are not saying we should not give fair hearing to people. The rule of law should work but let’s support the legal process,” he said.
According to Ghana’s laws, if a debtor fails to settle the loan that is due for repayment after reminders or notices from the bank, the money could be recovered through legal means.
However, the slow pace of the legal process remains a stumbling block.
“We want the courts to help us. Most of the cases are stuck in the court and the judicial system is very slow, sometimes there is a sense that the court system does not appreciate that the monies given to these individuals or firms that are not being paid are for the Ghanaian people,” the President of the Ghana Bankers Association, Alhassan Andani commented, on these concerns in 2019.
At a point, for example, the receiver of defunct Beige Bank was chasing over 1,000 loan defaulters of the bank.
An inventory asset and property report filed by the receiver to the BoG revealed that Beige Bank had total assets of GHS 494 million.
Out of the figure, GHS 282 million, representing 57% were loans and securities.
Unibank also had a total asset of GHS 2.2 billion. Loans and other securities constituted 82% of the total assets of the Bank.
The banking industry had a stock of gross loans and advances (both domestic and foreign) to the tune of GHS36 billion as of December 2018.