The Bank of Ghana is set to close down a number of microfinance institutions and savings & loans companies in the country over their inability to pay up depositors’ funds.

This follows reports that more than 200 microfinance institutions are currently distressed and unable to either pay up returns promised clients or in some instances, even pay up the principals of customers.

Speaking at a Financial Services Forum held in Accra on Thursday, Deputy Governor of the Bank of Ghana, Elsie Awadzi, said the move by the Central Bank to close down these institutions is to help strengthen the financial industry of the country. She adds that once that is done, the regulator (Bank of Ghana) will then begin to fully implement some newly introduced international standards.

“We’re building resilience in the financial sector such that the industry can support growth as a result of the expanding economy. There are so many regulations that need to be adopted due to the demand of the industry,” she said as she took her turn to respond to questions from a rather tense audience following recent happenings in the country’s financial sector.

Ghana’s Central Bank, has in the past few months closed down seven banks, five of them now merged to form the Consolidated Bank in a move the Bank of Ghana says is to help protect customer funds.

The move has seen a wave of panic withdrawals across banks and some other financial institutions in the country leading to the near collapse of several microfinance institutions. Reports indicate that more than 200 and nearly 300 of these microfinance companies are distressed and on the verge of collapse.

The Central Bank says it will, in the coming days be shutting down a number of these institutions just as it did some Banks.

Also speaking at the forum was President of the Ghana Bankers’ Association and Managing Director of Stanbic Bank Ghana, Alhassan Andani, who is of the view that the actions by the Central Bank of the country should not be seen as the reason for the several panic withdrawals but rather a signal of hope for the entire financial system of the country. He said the clean-up measures should whip up the confidence of the public in the financial sector.

He said, “the banking sector thrives on depositor’s funds, therefore, it is very important that their funds are saved. We as bankers support the clean-up and expect it to bring about some fresh confidence in the sector”