Lending money to your friends and family without licence is illegal – Prof Abotsi

3rd July 2023

In his latest informative post on Twitter, Dean of University of Professional Studies, Accra (UPSA) Law School, Professor Ernest Kofi Abotsi, focuses on Ghana’s laws with regards to regulation of institutions which carry on deposit-taking business.

In Ghana, the nitty-gritty of such operations are spelt out in the Bank and Specialised Deposit Taking Institutions Act, 2016 Act 930.

Professor Abotsi in his recent tweet containing an infographic highlights sections 6 (1) and 18 (1) (b) of the Act which talks about the role of a specialised deposit-taking institution and the necessary requirement in engagement.

“It is unlawful to lend money to another without a license and a lender cannot enforce the terms of any lending transaction without a license,” the infographic he shared read.

Under this law (section 18), a bank or specialised deposit-taking institution is permitted be engage in the following: acceptance of deposits and other repayable funds from the
public, lending, financial leasing, investment in financial securities, money transmission services, issuing and administering of means of payment including credit cards, travellers cheques, bankers’ drafts and electronic money; guarantees and commitments.

Such institutions can also engage in trading for own account or for account of customers with regards to money market instruments, foreign exchange, or transferable securities.

Specialised deposit-taking institution can as well participate in securities issues and provision of services related to those issues, advice to undertakings on capital structure, acquisition and merger of undertaking.

The rest are “portfolio management and advice, keeping and administration of securities, credit reference services and safe custody of valuables.”

But for the institution to operate, it must first obtain a licence as mandated per section 6 (1) of the Bank and Specialised Deposit Taking Institutions Act, 2016 Act 930.

The said section states that “a person shall not accept a deposit from the general public or carry on a deposit-taking business in or from within the country without a
licence issued in accordance with this Act.”

This comes at a time when the Bank of Ghana (BoG) has suspended the forex licences of Fidelity Bank Ghana Limited and First National Bank Ghana Limited for violating the rules of the Ghana Interbank Forex Market.

The two banks will not be able to engage in any forex transactions from 29th June 2023 to 28th July 2023, according to a press statement signed by Sandra Thompson, the Secretary of the BoG.

They have also been fined 1000 penalty points each, for breaching sections 3.4, 3.5, and 3.9 of the Ghana Interbank Forex Market Conduct.

In response to the revocation of forex licence, Fidelity Bank and First National Bank have rendered an unqualified apology to their customers.

The banks have however in the interim reached agreements with their partner banks to aid in seamless completion of foreign exchange transactions on their behalf.

According to the two financial institutions, they are are working with the Central Bank to resolve the current challenges.


Source: The Independent Ghana

Written by Web Master

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