The Bank of Ghana says it has abandoned its initial plans to suspend the issuance of new operating licences to microfinance companies.
The regulator has so far licenced about 435 microfinance companies and it is seeking avenues to contain the sudden surge of MFCs.
Raymond Amanfu, Head of Other Financial Institutions Supervision Department at the central bank, early this year told the B&FT the regulator will freeze the issuance of new licences in order to make supervision less cumbersome.
�Honestly, we will put a cap on the licences at a certain point,� he said in the January interview. The central bank has already licenced over 435 microfinance companies and declined 120 applications, with over 200 more pending.
Speaking in an interview last week, Mr. Amanfu conceded that freezing issuance of licences is not the best of options.
�No longer issuing operating licences means that you are encouraging people to go underground again. But we have to manage it and make sure that those that are coming up meet the minimum capital requirement and have good human resource,� he said.
Regulating the high number of microfinance companies has been a tough challenge for the central bank, which created Mr. Amanfu�s department to deal specifically with this rapidly-expanding financial sub-sector. Rather than putting a cap on the number of microfinance companies, Mr. Amanfu said, the regulator is considering other options like further raising the minimum capital requirement for microfinance institutions to inject a sense of sanity into a sector plagued by several challenges.
The central bank in 2012 revised the regulatory capital requirement for MFIs to at least GH�500,000 for companies with one branch, while additional branches are subject to further capitalization.
�The increase of the minimum capital requirement has reduced our burden. We have now seen a number of people withdrawing their licences; and if we have to increase it again to reduce the number, we will do that,� he said.
According to Mr. Amanfu, the central bank is getting tough with its regulations to weed-out dubious entities within the sector. Apart from ensuring strict compliance with the capital requirement, the regulator is keen on promoting good governance in the management of MFIs.
�We have strengthened our licencing procedure to probe the ownership of microfinance companies. The era of merely showing that you have the minimum capital requirement is over. We need to critically assess the source of your funding and even how you intend raising future capital,� he said.
The regulator, Mr. Amanfu added, is collaborating with the security agencies to close down MFIs operating without permit. In Accra alone, the Central Bank says it has identified close to 40 of such unlicenced entities and will soon clamp down on them.
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