MICROCAPITAL BRIEF: Bank of Ghana (BoG) Closes Down Illegal Microfinance Institutions, Increases Capital Requirements

The Bank of Ghana (BoG), the country’s central bank, reportedly is cancelling the licenses of and shutting down microfinance institutions (MFIs) that are engaging in practices such as: (1) charging interest rates in excess of government-mandated limits; (2) transferring operating licenses among organizations; or (3) changing their publicly recognized business name repeatedly in order to mitigate any effects of the firm’s poor reputation among current and former customers. According to a statement attributed to Mr Raymond Amanfu, the head of the central bank’s Other Financial Institutions Supervision Department, which oversees MFIs in the country, the department will no longer approve firms’ requests to change their names.

In other efforts to strengthen the industry, the capital requirements for new petitioners for microfinance licenses have been increased to GHS 300,000 (USD 79,000) for non-deposit-taking firms and GHS 500,000 (USD 240,000) for deposit-taking firms. The additional capital requirements for existing firms are GHS 100,000 (USD 26,000) for firms with five branches or fewer and GHS 200,000 (USD 53,000) for firms with larger branch networks.

Sources and Additional Resources

Ghana Web: http://www.ghanaweb.com/GhanaHomePage/business/artikel.php?ID=321850

Joy Online: http://www.myjoyonline.com/business/2014/August-19th/bog-bar-mfis-from-name-change.php

MicroCapital, August 13, 2014: Bank of Ghana Demands Photos of Owners of Microfinance Institutions to Deter Theft of Deposits

MicroCapital, July 12, 2014: Bank of Ghana Decides Not to Limit Number of Microfinance Licenses, May Raise Capital Requirements

MicroCapital, March 21, 2014: Bank of Ghana Licenses 394 Microfinance Institutions (MFIs), Donates Equipment to Trade Associations

MicroCapital, January 30, 2014: Bank of Ghana to Limit Number of Operating Licenses for Microfinance Institutions (MFIs)

MicroCapital Universe Profile: Bank of Ghana (BoG) Wiki

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