MICROCAPITAL BRIEF: Bank of Ghana Rejects Appeal by Customers of DKM Diamond Micro-Finance Limited; President Intervenes

The Bank of Ghana (BoG), the country’s central bank, recently rejected an appeal by the customers of the Ghana-based savings and microfinance company DKM Diamond Micro-Finance Limited (DKM) who had requested their cash deposits and matured investments with DKM to be paid out. BoG rejected the appeal due to the investigation into DKM’s practices being pending. BoG argued that it had to establish whether the MFI had violated the Ghanaian banking act before it allowed access to funds held by DKM.

Raymond Amanfu, the head of microfinance at BoG, said that accepting the appeal would be “contrary to the provisions to the act that [BoG] are operating under” and that paying back the deposits would make it difficult for auditors to reconcile the figures in question [1]. Mr Amanfu further noted that any decision regarding the payments requested by DKM’s customers would be made based on the report of the auditor conducting the investigation.

In May 2015, BoG suspended the operations of DKM, for a 90-day period, pending further inquiry. The accounts of DKM and its subsidiaries were frozen by BoG as a result of the suspension [2]. Responding to the plea of customers to intervene, Ghana’s President John Dramani Mahama recently asked BoG to expedite processes to ensure that cash deposits of customers were made available to them. He also requested the customers of DKM to exercise patience while the investigation was underway [3].

At the time of the suspension, DKM had GHS 107 million (approximately USD 24.4 million) in deposits [4]. As of 2012, the company reported approximately 9 million clients. Further financial information on the organization is unavailable as of 2015.

By Arpita Sarkar, Research Associate

About DKM Diamond Micro-Finance Limited (DKM):

Established in 2005, DKM Diamond Micro-Finance Limited (DKM) is a savings and microfinance company based in Sunyani, Ghana. The organization forms part of the Ghana-based DKM Group that provides financial services, including insurance, microfinance and investment management. As of 2012, the organization served approximately 9 million clients, including sole proprietors and private individuals. In May 2015, the Bank of Ghana, the central bank of the country, suspended the operations of DKM, for a period of 90 days, pending further inquiry on charges of violating the Ghanaian banking act. At the time of the suspension, DKM had GHS 107 million (approximately USD 24.4 million) in deposits. Further financial information on the organization is unavailable as of 2015.

Sources and Additional Resources:

[1] Citi FM Online: “BoG turns down appeal of DKM microfinance customers,” http://citifmonline.com/2015/06/02/bog-turns-down-appeal-of-dkm-microfinance-customers/#sthash.DSzedgAC.dpuf

[2] Citi FM Online: “DKM diamond microfinance customers drag BoG to court,” http://citifmonline.com/2015/05/15/dkm-diamond-microfinance-customers-drag-bog-to-court/#sthash.97mq1wQE.dpuf

[3] Ghana Business News: “President Mahama intervenes in DKM Microfinance matter,” https://www.ghanabusinessnews.com/2015/06/29/president-mahama-intervenes-in-dkm-microfinance-matter/

[4] Ghana Business News: “DKM has GH¢107m in deposits before suspension – Bank of Ghana,”https://www.ghanabusinessnews.com/2015/05/15/dkm-has-gh%C2%A2107m-in-deposits-before-suspension-bank-of-ghana/

MicroCapital Universe Profile: DKM Diamond Micro-Finance Limited (DKM), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=DKM+Diamond+Micro-Finance+Limited+%28DKM%29

MicroCapital Universe Profile: Bank of Ghana (BoG), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bank+of+Ghana+%28BOG%29

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