The Receiver for 347 Micro Finance companies as well as 23 Savings and Loans and Finance House companies whose licenses were revoked on 31 May 2019 and 16 August 2019 respectively, has issued a notice to depositors and the general public on full payments of locked-up funds. Speaking in an interview on 26th February 2020, The Receiver indicated that full and final payments are ongoing. He explained that the Government has made available to the Receiver a combination of cash and bonds totaling approximately GHS5bn to fully settle outstanding depositor claims of these institutions as well as of the 39 Micro Credit institutions in official liquidation. The Receiver stated that once ongoing payments are completed, over 352,000 claims will have been fully paid, leaving a difference about 8,000 claims, to clear by way of bonds only. As part of payment modalities, CBG will open new accounts for all depositors whose claims have been validated and agreed in the receiverships of the above companies. Following this, SMS messages will be sent out from the Receiver to depositors due for payment, setting out the account number and cash amount due to the depositor, which they can then withdraw. Depositors are informed that the Receiver will fully settle outstanding depositor claims once these claims have been validated and agreed upon. Stakeholders may direct all concerns on the above receiverships to www.ghreceiverships.com
Some 6,446 individual customers of the collapsed savings and loans, micro finance and micro credit institutions have been paid, three days after the Receiver began paying depositors their locked-up funds. For S&Ls, 449 social organizations, 418 companies and 152 rural banks and finance houses have been paid. 132 social organizations, 22 rural banks and finance houses, 48 financial security entities and 44 companies have so far received their locked-up funds with regard to MFIs. For MCIs, 28 companies and institutions have so far been paid. A combination of cash and bonds will be used to settle depositor claims. According to the Receiver, 97.6% of individual claimants will be fully settled in cash. But other categories of depositors including corporates will be fully settled through a combination of cash and bonds. In the first day of payment, about GHS200 million was disbursed to 800 customers by the Receiver through Consolidated Bank Ghana. The government, through the Ministry of Finance, on Monday, released GHS5 billion to the Receiver of the defunct Savings and Loans and Microfinance Companies, as well as the Official Liquidator of the Microcredit companies through Consolidated Bank Ghana (CBG). This was in a combination of cash and bonds to fully settle all validated claims due depositors of failed Specialised Deposit-Taking Institutions (SDIs). This intervention, the ministry said, will provide liquidity and guarantee the funds of individuals, businesses, and financial institutions that have been locked up in these defunct financial institutions, pending the completion of the Receivership exercise, adding, with this intervention, all depositors will now be paid in full.
Government has announced that it has allocated GHc5 billion for the complete refund of all deposits placed by the banking public with the savings and loans companies and the microfinance institutions that were liquidated in mass by the Bank of Ghana last year. This confirms the promise made by vice president Dr Mahmud Bawumia recently in Kumasi at his latest town hall meeting with the general public. The announcement marks a departure from government’s earlier policy stance, dictated by fiscal constraints last year, which forced it to place a GHc20,000 cap on refunds to depositors. The decision to make full refunds brings its stance in line with that applied to deposits in commercial banks that were liquidated between 2017 and 2019. Initially, government had obviously hoped that recoveries by the receivers it had contracted to wind up the affairs of the liquidated financial intermediaries would make up the gap between its cap on refunds and what was actually due to depositors. However, it has since become clear that just as with the liquidated commercial banks, most of the lost monies will not be recovered; so far only about GHc1 billion out of GHc10 billion anticipated has actually been recovered. Thus, government was caught between leaving depositors to lose much of their monies, along with their confidence in financial intermediation, or refunding those monies and taking a severe hit on its already precarious fiscal position. The debate as the preferred option will continue to rage. This newspaper simply holds the view that it was government’s call to make, which it has gone ahead to do. Support for, or opposition to that decision by the public will form part of the considerations that will go into the voting decisions made during the next general elections scheduled for late this year. However, we find it imperative to point out that government’s refunds only apply to financial intermediation institutions that were duly licensed by their regulators. Thus, for example, it will not apply to customers of MenzGold, who chose to believe the celebrities who supported that institution rather than the regulatory authorities who warned that it was not duly licensed to engage in the activities it was carrying out. This should serve as a crucial lesson for the banking public going forward. Regulators have the final say and have the best information as to the activities of the institutions under their purview. Just as importantly, the banking public should realize that those regulators will not be in a hurry to warn them off during the early stages of a deposit taking institution’s financial troubles because doing so would all too easily cause a run on deposits and thus forestall any possibility of restoring its financial stability and solidity. Therefore, the banking public needs to learn how to judge the safety of each deposit taking institution as a haven for their savings and investments by themselves, using basic informative ratios such as capital adequacy and liquidity. These ratios are quite easy to understand and deposit taking institutions are required by law to display them in their respective banking halls. The banking public needs to be warned that the refunds now being financed by an already cash-strapped government will not happen again. Deposit insurance has now commenced but coverage is severely limited to retail sized deposits; a depositor who leaves large deposits in an institution that goes under stands to lose most of the money deposited. Ignorance is no excuse under the law; going forwards financial ignorance will be no excuse either.
The receiver of the collapsed microfinance companies, savings and loans, and finance houses, has assured that all affected depositors will receive their locked up investments by end of March this year, after payment processes started on Monday, February 24, 2020. The deadline follows a promise by President Akufo-Addo during the State of the Nation Address delivered last week, where he revealed that an amount of GH¢5 billion has been earmarked to reimburse all customers of the defunct companies from Monday, February 24, 2020. In an interview with Citi BusinessNews, spokesperson for the Receiver, Philomena Kuzoe, said since February 24, about 800 people have been notified to retrieve their locked-up cash amounting to GH¢200 million from Consolidated Bank Ghana (CBG). “So yesterday [Monday], we paid the social institutions made up of the churches, hospitals, schools, welfare associations who have their claims with these defunct microfinance and savings and loans institutions. We are expecting to finish by the end of March.” “By the time we finish with this exercise, which involves about 360,000 depositors, we will only be left with about 8,000 who we will be doing cash and bonds,” she added. Payments of locked deposits The customers of the 347 microfinance companies, 23 savings and loans and finance houses, as well as 39 micro-credit institutions with outstanding obligations, are expected to be paid in either cash or bonds. According to a release issued by the Consolidated Bank, Ghana, the bank has chosen to payout customers’ funds, and will open new accounts for affected customers whose claims have been validated and accepted for payment. It added that the GH¢5 billion the government has earmarked to settle all outstanding payments in full is a combination of cash and bonds. The bank adds that customers whose locked-up funds exceed the GHS20,000 cap will have another investment account created on their behalf where they will be paid using the bond which will mature later. The Bank adds that the affected customers are to wait for an SMS from the receiver confirming the acceptance of their claims before turning up at any CBG Branch for payments. The customers will be required to present any national identification card in order to access their funds. Corporate and SME customers of defunct financial institutions are also not left out in this bout of fresh payments. The bank says such customers will receive a default savings account that will be opened and communicated to them by the Receiver. “They will then go through the normal KYC to open their current accounts where funds in the savings account will be transferred into,” the statement said.
The Receiver of the defunct financial institutions has so far credited ¢200 million into accounts of 800 depositors of the Consolidated Bank Ghana (CBG). Payment of the depositors funds commenced on the night of Monday, 24 February 2020. This has resulted in corresponding SMS messages sent to some depositors. Some of these beneficiaries that have been communicated via text messages were mainly schools, hospitals and churches with locked-up funds. Consolidated Bank Ghana, going forward will continue to credit accounts of depositors whose claims have been validated. The receiver was expected to roll out the payment to these depositors Monday before the close of work. But it appears challenges with finalizing work on validated claims may have affected them in meeting that deadline. According to the receiver it has received 5 billion cedis in cash and bonds to facilitate this payment. According to the finance ministry is has spent GH¢17.7 billion on the financial sector clean-up. GH¢11.65 billion cedis was spent on the banking sector. GH¢6.1 billion on specialized-deposit-taking-institutions as well as microfinance institution. The finance ministry has noted that this would help improve liquidity in the system.
The government has so far spent about GH¢17.7 billion on the clean-up of the financial services sector. GH¢11.65 billion has been used to settle depositors in the banking sector and GH¢6.1 billion on the Savings and Loans Companies and Microfinance Institutions. According to a statement from the Finance Ministry, “We expect that the recent accelerated pace of the prosecutions and an intensification of the civil recovery process under the Receivership will result in substantial recovery of these monies for the Treasury.” The government, through the Ministry of Finance, on Monday, 24 February 2020, released GH¢5 billion to the Receiver of the defunct Savings and Loans and Microfinance Companies, as well as the Official Liquidator of the Microcredit companies through Consolidated Bank Ghana (CBG). This was in a combination of cash and bonds to fully settle all validated claims due depositors of failed Specialised Deposit-Taking Institutions (SDIs). This intervention, the ministry said, will provide liquidity and guarantee the funds of individuals, businesses, and financial institutions that have been locked up in these defunct financial institutions, pending the completion of the Receivership exercise, adding, with this intervention, all depositors will now be paid in full. It will be recalled that the Ministry initially provided funds for the Receiver to settle validated depositor claims of the defunct Savings and Loans as well as Finance Houses of up to GH¢20,000 per depositor, with the understanding that the remaining validated claims would be settled as and when value was realised from the sale of the assets of the defunct institutions. However, due to the slow process of recovery in the receivership process, the Ministry has now made available these additional resources to pay all remaining validated depositors’ funds. The statement added that all depositors affected should note that the Receiver and Consolidate Bank Ghana will provide them with a detailed plan and procedures to fully settle all outstanding depositor claims in cash and fixed instruments once the claims have been validated in line with the resolution process.
Customers of collapsed saving and loans, as well as microfinance, institutions, also known as specialised deposit-taking institutions (SDIs), can now heave a sigh of relief following the initiation of a process to pay the full amounts of their deposits to them. The receiver and Official Liquidator of the defunct SDIs started the process yesterday, after the Ministry of Finance had announced that GH¢5 billion would be released to Consolidated Bank Ghana (CBG) Limited to be used to settle the deposits of the customers. The amount will benefit customers whose funds were held up in the 23 savings and loans companies (S&LCs) and the 386 microfinance and micro-credit companies that collapsed last year. A press statement from the ministry and the CBG said the amount was a “combination of cash and bonds” and would first benefit customers whose claims had already been validated by the receiver and official liquidator. The CBG statement urged customers whose claims were yet to be validated to exercise patience while the two institutions carried out the validation exercise. President assures The Ministry of Finance statement said the GH¢5 billion released to CBG would be used to fully settle all validated claims due depositors of the failed institutions. “With this intervention, all depositors will now be paid in full,” it said. The decision to pay the full amounts of depositor funds locked up in the collapsed institutions was first announced by President Nana Addo Dankwa Akufo-Addo in this year’s State of the Nation Address last week. In the statement to Parliament, the President gave an assurance that all depositors of S&LCs and microfinance institutions, including DKM which collapsed in 2015, would receive 100 per cent of their deposits once the validation exercise was concluded. Liquidity In the Ministry of Finance statement, the government said the reimbursement of depositors would “provide liquidity and guarantee the funds of individuals, businesses and financial institutions that have been locked up in these defunct financial institutions”. It thus asked the affected depositors to expect the receiver and CBG to provide them with a detailed plan and procedures to fully settle all outstanding depositor claims “in cash and fixed instruments once the claims have been validated, in line with the resolution process”. Confirmation Confirming the development in a separate statement, the Managing Director of CBG, Mr Daniel Addo, said the bank had, indeed, received the GH¢5 billion from the government and all was set for the full payment of funds to the affected customers. He said the bank had developed a modality that would be used in paying depositors and explained that first payments would go to depositors whose claims had already been validated. He, therefore, advised depositors whose claims were yet to be validated to exercise patience. Mr Addo assured them that their claims would be paid as soon as the validation was completed by the receiver. He said SMS would be sent to depositors when their payments were due by the receiver, adding that there was no need for them to go to the banking halls if they had not received notification by SMS to go for their funds. Modalities Explaining the modalities for the payment of the outstanding depositor obligations, Mr Addo said “based on information to be provided by the receiver on depositors, CBG will open new accounts for all depositors whose claim(s) have been validated and agreed in the receiverships of the companies, and the SMS messaging that will be sent will communicate the account number and the amount due each depositor”. Once a customer’s deposits had been paid, the MD said, depositors could access their funds at any of the bank’s branches. He, however, advised them to go to the branches with valid national identification documents, such as driver’s licenses, voter ID cards or passports. “Corporate depositors will, however, be fully settled through a combination of cash and bonds,” he added. Total cost The 23 S&LCs and the 386 microfinance and micro-credit institutions were collapsed last year as part of a far-reaching financial sector clean-up undertaken by the Bank of Ghana and the Securities and Exchange Commission. Following the release of the GH¢5 billion, the Ministry of Finance said the “government would have so far spent about GH¢17.7 billion on the resolution process”. Giving a breakdown, it said GH¢11.65 billion was spent on the banking sector and GH¢6.1 billion on the SDIs and MFIs. “We expect that the recent accelerated pace of prosecutions and intensification of the civil recovery process under the receivership will result in substantial recovery of the money for the Treasury,” it added.
Customers of defunct Savings and Loans, as well as microfinance companies, are to receive their payment through the Consolidated Bank Ghana (CBG). The Bank in a communique to staff Monday outlined modalities for payment to customers effective today, February 24. “Based on data to be submitted to CBG by the Receiver, CBG will open new accounts for all depositors whose (claims) have been validated and accepted by the Receiver for payment. “CBG will open two sets of accounts, one operational account and another investment account to hold the bonds if the customer’s fund exceeds the cash payment threshold,” the communique said. There will also be an SMS sent from the Receiver, Eric Nipa, to the depositors due for payment, setting out the account number and cash amount due to depositors. According to the bank, depositors who want to at any time access their funds after should bring along either a drivers’ license, voter’s identification card or a passport to confirm their identity. For corporate and SMS customers, the statement added that they “will receive a default savings account that will be opened and communicated to them by the Receiver. “They will go through the normal KYC to open their current accounts where funds in the savings account will be transferred into.” President Nana Akufo-Addo’s comments in Parliament last Thursday reiterated what leaders of his Economic Management Team namely, Vice President Dr Mahamudu Bawumia and Finance Minister, Ken Ofori-Atta had said on various platforms. Mr Ofori-Atta hinted on Newsfile that customers of the various defunct financial institutions will be paid their deposits in full, by the end of 2020. During his recent maiden town hall meeting in Kumasi, Dr Bawumia assured depositors whose funds have been locked up in regulated but defunct financial institutions of full restitution of their funds.
The Official Liquidator (OL) of the 39 insolvent microcredit companies whose licenses were revoked by the Bank of Ghana (BoG) has announced modalities for the payment of the outstanding fixed investment holder’s obligation: PRESS RELEASE NOTICE OF FULL PAYMENTS TO FIXED INVESTMENT HOLDERS OF 39 MICROCREDIT INSTITUITONS (IN OFFICIAL LIQUIDATION) WHOSE CLAIMS HAVE BEEN VALIDATED IN THE LIQUIDATION PROCESS IN THE MATTER OF THE BODIES CORPORATE (OFFICIAL LIQUIDATIONS) ACT, 1963 (ACT 180) AND IN THE MATTER OF THE REVOCATION OF THE LICENCES OF 39 INSOLVENT MICROCREDIT INSTITUTIONS BY THE BANK OF GHANA UNDER SECTION 7 OF THE NON-BANK FINANCIAL INSTITUTIONS ACT 2008 (ACT 774) AND APPOINTMENT BY THE BANK OF GHANA OF A LIQUIDATOR UNDER SECTION 38 OF ACT 774 FOR THE OFFICIAL WINDING UP OF 39 INSOLVENT MICROCREDIT COMPANIES AND IN THE MATTER OF THE WINDING UP ORDER BY THE REGISTRAR GENERAL UNDER SECTION 3 (4) OF ACT 180 FOR THE OFFICIAL WINDING UP OF 39 INSOLVENT MICROCREDIT COMPANIES IN THE MATTER OF NOTICE OF FULL PAYMENT TO FIXED INVESTMENT HOLDERS OF 39 INSOLVENT MICROCREDIT COMPANIES Pursuant to Section 7 of the Non-Bank Financial Institutions Act 2008, (Act 774) the Bank of Ghana revoked the operating licenses of 39 insolvent Microcredit companies on 31st May 2019. The Bank of Ghana (“BoG”) in accordance with Section 38 of Act 774 has appointed the Registrar General to initiate proceedings as Official Liquidator of the affected Microcredit companies, to wind up the companies by way of Official Liquidation The main duties of the Official Liquidator are: To recover and maximise asset realisations for the benefit of Creditors including mainly Fixed Investment Holders and Distribute realisations in accordance with the relevant provisions of Bodies Corporate Official Liquidation Act 1963, (Act 180), to satisfy the indebtedness of these institutions to their body of Creditors, to the extent possible. As you may be aware, the asset recovery phase of the Liquidations is underway but given the slow pace of realisations arising out of the poor quality of most of the assets of these affected institutions, the Official Liquidator is compelled to undertake a detailed assets tracing and forensics exercise in collaboration with the Law Enforcement agencies, and the successful outcome of this exercise is likely to take some time to achieve. Pursuing this recovery route therefore, the indebtedness of these affected institutions to their body of creditors, including Fixed Investment Holders are not likely to be met any time soon. In line with Government’s commitment to protect Investors’ funds and to shore up public confidence in the financial system, Government has made available to the Official Liquidator of the 39 affected Microcredit institutions and the Receiver of the 347 Microfinance and 23 Savings and Loans and Finance House companies whose licenses have been revoked, a combination of cash and bonds totalling approximately GHS5bn to fully settle outstanding depositor/fixed investment holder claims of these resolved institutions as well as of the 39 Microcredit institutions in official liquidation. Modalities for the payment of the outstanding Fixed Investment Holders’ obligations effective Monday 24 February 2020 are as follows: Based on information to be provided by the Official Liquidator on Fixed Investment holders due for payment, CBG will open new accounts for all Fixed Investment Holders whose claim(s) have been validated and agreed in the official liquidation of the affected institutions. SMS messaging from the Official Liquidator to Fixed Investment Holders due for payment, setting out the Account number and Cash amount due fixed investment holders. Accessing funds at any CBG branch by the fixed investment holder showing any of these valid Identity card i.e. Driver’s License, Voter’s Identity Card, Passport, to confirm his or her identity. (A duly notarised Power of Attorney should be presented in respect of Fixed investment holders who have nominated persons to act on their behalf) A combination of cash and bonds will be used to settle fixed investment holders’ claims. It is expected that with the above funding arrangement comprising part cash and bonds, about 97.6% of individual claimants in number (including individual depositors in the resolved Microfinance Institutions and Savings and Loans and Finance House companies) will be fully settled in cash. Other categories of fixed investment holders including corporates will be fully settled through a combination of cash and bonds. Please note that the Official Liquidator will fully settle outstanding fixed investment holder claims once these claims have been validated and agreed in the liquidation process. Please note further that the Official Liquidator continues to validate fixed investment holders’ claims not yet validated and agreed in the liquidation and will communicate the status of fixed investment holder claims submitted within the claim deadline period, as and when they have been validated and agreed in the official liquidation of the above affected companies. Stakeholders may direct all concerns on the above liquidations to the Official Liquidator, Registrar General Department, Ministries, Accra or to Tel: + 233 (0) 242 439 441 DATED AT THE OFFICES OF THE REGISTRAR GENERAL’S DEPARTMENT, ACCRA THIS 21 DAY OF FEBRUARY 2020 SGD JEMIMA MAMAA OWARE (MRS) OFFICIAL LIQUIDATOR