Customers of microfinance companies and other financial institutions that went under prior to the passage of the Depositors’ Protection Bill 2015, will not be entitled to proceeds from the scheme.
This is the indication coming from banking consultant, Nana Otuo Acheampong.
According to him, the law will take a prospective effect rather than a retrospective one.
“They are not affected because the law will take not take a retrospective effect it is a prospective one and therefore all those who suffered before the passage of the law will not benefit from it,” he explained.
Parliament early this week approved the Depositors’ Protection Bill which will among other things provide insurance to depositors who lose investments to financial institutions.
Under the policy, depositors of banks will receive 6,250 cedis while depositors of other financial institutions including microfinance companies will be entitled to 1,250 if a financial company goes under.
The call for a protection for depositors intensified after the reports on the microfinance debacle involving companies such as DKM and God Is Love fun club.
DKM for instance was cited to have about 77 million cedis of depositors’ monies locked up in its operations.
The Registrar General’s Department has since assumed responsibility to manage the liquidation process and proffer a payment schedule for affected persons to be settled their due.
However customers of God Is Love fun club are yet to retrieve their locked up investments. Some therefore were of the belief that the passage of the Bill will be of benefit to such affected clients.
But Nana Otuo Acheampong disagrees. He explains that the respective companies could not have contributed to the insurance pool hence there would not be the need to allow customers benefit from them.
“The protection is an insurance scheme so there is a premium to be paid by the banks and then passed unto the consumers; therefore, how do you benefit from something you did not contribute to?”he queried.
BoG must intensify supervision Meanwhile the Banking Consultant has agreed to calls for the Bank of Ghana and the commercial banks to tighten their supervisory role and realize the objectives of the new Depositors’ Protection Law.
Dr. MP for New Juabeng and Member of Parliament’s Committee on Finance, Dr. Mark Assibey Yeboah had alluded to this during contribution to the debate on the floor of Parliament.
“Regulating over 600 institutions is a serious issue and therefore the central bank ought to engage more staff to ensure that the necessary supervision is put in place and the other is for the banks and financial institutions themselves to know that now the depositors are going to be protected so they have to ensure that their houses are put in order and their records are up to date and so if the unforeseen happens, then they do not have a problem as to who their depositors were and so on.”
Microfinance Association welcomes law Meanwhile the Association of Microfinance Companies has welcomed the new Deposit Protection Bill.
Some members of the Association contend that it will bring some sanity and restore confidence in the industry.
Though the Chairman of the Association of Microfinance Companies, Collins Amponsah describes the move as being long overdue, he tells Citi Business News the law comes as a great relief to the Association.
“It’s welcoming news but it is long overdue; these are some of the value additions that come to enhance the financial systems of any country. When it comes to banking depositors are key clients who need protection and so with these scheme coming into law, it is going to build confidence of depositors as they do business with the banks and other specialized deposit taking institutions,” he noted.