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Savings and Loans Association urges public to deal with only licensed institutions

By: Ama Amankwah Baafi
• Mr Tweneboah Kodua Boakye
• Mr Tweneboah Kodua Boakye

The public have been cautioned against depositing their funds and taking loans from unidentified savings and loans companies and at higher interest rates.

The Ghana Association of Savings and Loans Companies (GHASLAC), wants people to secure loans or deposit money with only properly licensed companies to avoid being duped.

In an interview with the Executive Secretary of GHASALC, Mr Tweneboah Kodua Boakye, in Accra, he said people contemplating to take loans from such sources must beware and cross-check if they were duly authorised.

“We must all be vigilant. I will advise that if you are a customer and you realise that your financial institution is misbehaving you have a responsibility to report to the appropriate authorities,” he stated.

The issue
Some Ghanaians have fallen victim to the schemes of unlicensed companies who promised higher returns within a short term and sometimes at no charge.

Most people either save or take loans from these companies mostly without doing due diligence and so do not think of the consequences until they are required to pay back or need to go for their monies.

Majority of the loan companies do not have offices where they operate, and the interest rates charged on these loans are exorbitant and could be as high as 200 per cent.

Indeed, some people have been reduced to just work to service the loans they take without knowing when they would finish paying back, while others have lost huge sums because the companies they dealt with could not be found.

Mr Boakye said it was proper for people to cross-check any financial institution, they intend to deal with to safeguard their hard-earned money.

Weaning out bad lots
There is no doubt the activities of the bad lots in the sector have given operators a bad name.

According to Mr Boakye, one action might bring a certain challenge into the space and non-members or those who didn’t belong to any association were those causing the challenges.

“The law requires you need a license to operate within the rules and regulations. We have increased our collaboration with the regulator to ensure that those who are not within the ambit of the law are brought in line to ensure they comply,” he said.

Ensuring sanity
He said the association had embarked on some capacity building programmes for its members and at the individual level.

“Members were being schooled on the Banks and Specialised Deposit-Taking Act, Act 930, so they will be abreast of it and we are seeing an improvement in the space,” he indicated. 

He announced the GHASALC’s annual general meeting would focus on corporate governance; what are practitioners supposed to do and what is the regulators role in ensuring that the sector is well sanitised. 

Public education
He said there was the need for all stakeholders in the sector, including the media to create the platforms to sensitise the public about the operations of the savings and loans sector.

“We need to educate ourselves. The higher the returns, the higher the risk. So, let’s all build a system so that the risk inherent, those that we have control over we will be able to control and those we can’t we will look at how best to resolve them,” he said. 

The association has 37 licensed members who offer about 13,000 direct employment nationwide.

According to Mr Boakye, they controlled almost GH₵8 billion in assets and a client base of about 3.2 million. 

“Our branch network across the country as at December last year was around 640. All these people are creating huge impact on the lives of people. Most of these are small and medium enterprises who but for the non-bank financial institution of which we play a key role their businesses would not thrive,” he said. — GB