Shun services of unlicensed microfinance institutions – BoG

The Bank of Ghana has cautioned the public to desist from patronising services of microfinance institutions whose credibility cannot be ascertained because they are not licensed.
According to the central bank, it was important for the public to be wary of such institutions to safeguard their own deposits and investments
The central bank, which has so far provided 204 provisional licenses out of the over 500 applications from microfinance institutions, gave the assurance that the bank was working hard to satisfy itself of their operations before issuing them with the final licenses.
“Very soon we shall be publishing the names of those who have been licensed by Bank of Ghana and those who have not would be forced to wound up as indicated in the guidelines,” the Head of Microfinance Unit of the Bank of Ghana, Dr Yaw Gyimah-Larbi, told the GRAPHIC BUSINESS in an interview.
He thus urged members of the public who doubt the credibility of some institutions to contact the Bank of Ghana and the apex body of the microfinance institutions, for help when in doubt.
Commenting on why the central bank had been silent on licensing after its deadline, Dr Gyimah-Larbi explained that the regulator wanted to give opportunities to more such institutions to apply for licensing to regularise their operations after the January 1, 2012 deadline.
“You can’t rush the process as these institutions prior to the licensing have taken people’s money and care has to be taken for them to refund all deposits,” he explained.
He added “before issuing a license it goes through an elaborate process and it is when we finally issue out the licence that we can say the institution is credible and the public can deal with them.”
Stressing on the need for licensing, Dr Gyimah- Larbi said “we have been emphasising that people should deal with licensed microfinance institutions that is why we are coming out with this regulation. The regulation is to build confidence and bring formality into the sector which hitherto was not available.”
According to him, any institution which did not take advantage of the licensing procedures would be forced to wind up after the elapse of the grace period.