Bernard Otabil, the Director of Communications at the Bank of Ghana (BoG), has dispelled certain notions about the reasons behind the revocation of the licence of GN Savings and Loans in response to a recent media report that said “it makes no sense“.

Mr Otabil emphatically stated that “it made sense” and that the decision was made based on sound judgement to protect the integrity of the banking sector.

“We tried to take our time with the case of GN Bank, which later became GN Savings and Loans”, Otabil stated.

“When depositors started shouting all over the country because the Savings and Loans company could not meet depositors’ withdrawals, it was time to act!”

Reports from various media outlets had already highlighted the growing unrest among depositors. Articles from sources provided accounts of customers’ frustrations and demands for their money.

Otabil further explained that the Bank of Ghana’s Financial Stability Department received numerous complaints regarding GN Savings and Loans’ inability to honor withdrawals.

Aside from the reported cases in the media, the Financial Stability Department of the Bank of Ghana received complaints of the company’s inability to pay their deposits on demand.

To ensure an orderly exit of the company and protect the sanctity of the banking sector, the company’s licence had to be withdrawn in accordance with the provisions of the Banks and Specialized Deposit-Taking Institutions Act, 2016 (Act 930).

“The revocation of GN Savings and Loans’ licence was not a hasty decision. GN Bank initially struggled to meet the new minimum regulatory capital requirement of GHS400 million by the end of December 2018. Consequently, it applied to be reclassified as a Savings and Loans Company, a request that the Bank of Ghana granted. However, by August 2019, persistent liquidity issues and customer complaints necessitated the withdrawal of its licence, he furthered.

In addressing another media report of a mistake in the revocation of the licence of another institution, Otabil firmly dispelled any notion of mistakes.

“This is also misinformation. The Bank of Ghana published details of the reasons for the revocation of the licence of each and every institution. Whereas the dominant reason had been about insolvency and the loss of franchise value of the affected institutions, there were other reasons too. In a particular case, reference was made to a bank that was licensed based on false capital. Fortunately, it did not have that many deposits and therefore the Receiver did not fall on government resources to pay off their depositors. There was no mistake here and the misinformation must be corrected,” he said.

Otabil concluded by reassuring the public of the Bank of Ghana’s dedication to maintaining a stable and trustworthy financial system.

“I assure the general public of the Bank of Ghana’s commitment to promoting the integrity and stability of the financial system.”

Source: Kasapafmonline.com/Akokoraba Nyarko