The Second Deputy Governor of the central bank, Elsie Addo Awadzi, has charged shareholders, boards of banks and other deposit-taking institutions to quickly in addressing early signs of distress to mitigate the risk of failure.

According to Elsie Addo Awadzi, such early prompting has ramifications not only for depositors but also for the stability of the entire financial system and the economy as a whole.

Speaking at a webinar for the Ghana Association of Restructuring and Insolvency Advisors (GRIA), the second deputy governor said: “the Basel Core Principles require bank supervisory authorities to have adequate legal powers to impose prompt corrective action on weak institutions to give them a chance of recovery within a reasonable timeframe failing which they are required to take steps to resolve these institutions under a special resolution regime.”

As part of its efforts to restore confidence in the banking and specialized deposit-taking sectors, the Bank of Ghana (BoG) embarked on a clean-up exercise in August 2017 to resolve insolvent financial institutions whose continued existence posed risks to the interest of depositors.

The clean-up saw the revocation of licenses of 9 universal banks, 347 microfinance companies, 39 microcredit companies or money lenders, 15 savings and loans companies, 8 finance house companies, and two non-bank financial institutions.

The move by the central bank was a comprehensive assessment of the savings and loans and finance house sub-sectors carried out by the BoG in the last few years after it identified serious breaches.