The Ghana Securities Industry Association (GSIA) has appealed to the government to speed up the validation and payment of monies to investors whose funds are locked in collapsed microfinance and savings and loans institutions in 2019.
In a statement issued in Accra on behalf of the Governing Council, GSIA, the Association said so far, only GH¢83 million had been paid to Fund Managers and their clients.
The payment, it said, was part of the GH¢1.43 billion of the GH¢1.87 billion exposure that has been validated.
According to the statement issued by the Executive Secretary, the balance paid in the form of non-interest bearing instrument makes up only six per cent of the total validated exposures.
“This makes up less than six per cent of the total validated exposures. Some institutions in other sectors of the financial system have received more than 50 per cent cash payments.”
It is recalled that the Bank of Ghana revoked the licences of 23 savings and loans institutions on the August 16 2019 and 347 microfinance institutions on May 31, 2019 as part of its banking sector cleanup exercise.
There has been an ordered process since, with the appointed Receiver for the process of paying depositors and investors all or part of their monies after their balances have been reconciled.
This exercise was carried out with the assurance that no depositor or investor would lose his/her funds.
In a Notice to depositors of the said institutions, the Receiver, Mr Eric Nana Nipah announced that, “with effect from Thursday, April 2, 2020, Consolidated Bank Ghana (CBG) will be issuing a Government backed non-interest bearing Financial Instrument worth approximately GH¢4bn to depositors…,”.
The characteristics of the instrument were in the nature of coupon rate (zero coupon rate ie non-interest bearing), drawdowns; in 10 equal installments every six months and timing of first draw down payment starting March 31, 2021.
Investment management firms or Fund Managers had a total of GH¢1.87 billion locked up in these failed institutions.
However, the Association has expressed concern that should the instrument be traded in its current form, investors stand to lose a substantial portion of their investment value.
The statement said that the GSIA had a number of engagements with key stakeholders, namely; – the Securities & Exchange Commission (SEC), Ministry of Finance (MoF), Consolidated Bank Ghana (CBG) and the Receiver (PwC) to negotiate to be given a higher cash portion.
Thus, an increase in the cash component of the pay-out it said would ease the already tight liquidity situation in the sector and provide relief to these clients.
“We acknowledge the tight fiscal situation of the government. However, on behalf of our members and these clients, we are appealing to the government through the Ministry of Finance to urgently consider our request. We trust that a speedy resolution of this issue will restore calm and bring relief to an already ailing sector,” the statement said.