BoG’s approach in cleaning banking sector was excellent-Veep
Vice President Dr. Mahamudu Bawumia has described the Bank of Ghana’s approach in the banking sector clean-up as excellent.
The economist and former deputy governor of the central bank believes, the approach was commendable and the BoG must be commended.
According he is fully supportive of the approach used.
Speaking on Ekosiisen on Asempa Fm, he said in 2015, he raised an alarm that the banking system would collapse based on the asset quality review report the IMF had done.
He recounted his warning that some 8 banks were on the verge of collapse and yet, the then government failed to take action.
He made claims that banks under the NDC were set up fraudulently without capital.
He wondered why that occurred when officials knew that one needed capital to protect depositors in time of crisis.
Dr. Bawumia explained if you set up a bank without capital then it means you have set out to defraud depositors.
”So there was fraud taking place…the supervision was weak. There was a point when we came to office, and realised this was going on and what frightened me was the situation we got to and it looked like if the Bank of Ghana did not move, the whole system will crash.”
The BoG he emphasized had to move quickly in solving the problem to restore confidence in the banking sector.
”It was not something of pleasure,” he said, adding that the clean-up was essential because despite liquidity given to these affected banks, some of them to set up other banks and buy properties”.
Meanwhile, he has announced that some 99.2% depositors of the collapsed financial institutions have been paid.
For the 9 commercial banks that collapsed, all the depositors have been paid, the depositors in the savings and loans category, we have 300, 089 claims, and we have paid 296,344 with 3, 745 claims left to be paid and are due to related party transactions that are being investigated.
For the micro-finance sector, there were claims of 165,168 and we’ve paid 164,995. So in total, the claims for the savings and loans and the micro-finance institutions was 465,257 claims separate claims and we’ve paid 461,339. That is 99.2%.