The Bank of Ghana has revealed plans to shut down a number of Non-Bank Financial Institutions (NBFIs) grappling with significant liquidity challenges. The central bank cited the severe liquidity issues as hindrances to meeting financial obligations to clients and depositors, leading to unsuccessful attempts to salvage these institutions.
Dr. Ernest Addison, Governor of the Bank of Ghana, disclosed during the Monetary Policy Committee press briefing that despite regulatory efforts to sustain these institutions, they have proven unsustainable. He emphasized that certain legacy institutions in the non-banking sector are struggling to fulfill depositor payments, posing a persistent challenge.
Addressing the issue, Governor Addison acknowledged, “We have some legacy institutions in the non-bank sector that are in a sense not able to meet depositor payments, and these are legacy problems.” Despite ongoing efforts under the IMF program, raising necessary resources for resolution has proved elusive.
This development echoes the banking reform undertaken by the Central Bank between 2017 and 2019, where numerous financial entities in Tier 1, 2, and 3 categories were shut down. A total of 420 financial institutions had their licenses revoked in the widely recognized Banking Sector Cleanup exercise.
Source: norvanreports.com