Mr Ahumah Ocansey, an Accra-based legal practitioner, on Thursday called on Bank of Ghana (BOG) to conduct forensic audit of operations of Non-Banking Institutions (NBIs) to ascertain the volumes of monies given out.
In a statement copied to Ghana news Agency (GNA) in Accra, Mr Ocansey pointed out that excessive interest rates were crippling businesses and called on BOG to approve interest rates charged by NBIs before they were enforced.
He observed that most Ghanaian companies and enterprises that accessed loans from the NBIs were experiencing a crippling of their businesses with collateral damage to the economy because of the excessive interests exacted on the loans.
Mr Ocansey said the loans attracted monthly interest rates, interest was compounded and pecuniary penalties were paid in the event of default, adding “each loan is backed with property collateral, vehicle, land, building and these are forfeited to redeem the loan in the event of default”.
He noted that most of the companies and enterprises did not always pay every loan fully as expected due to poor returns on business, secondary indebtedness by other persons, over expenditures at the ports during clearance and sometimes defrauding of Ghanaians by foreign companies.
Mr Ocansey said the Money Lenders Ordinance must be replaced altogether with a new law that would place money lending under the control of BOG and not the police who had the authority to licence money lenders and inspect their books.
“Private lenders seldom register, and monies lent out have high interest rates as punitive as those lent by the NBIs,” he added.
Mr Ocansey said since the normal banks appeared to be reluctant to advance business loans, most Ghanaians fell on the NBIs and money lenders for assistance, while because of the excessive profits, accruing to money lenders, more and more people were opening money lending businesses.
“Owing to the general downturn in the economy, and scarcity of cash, most Ghanaian businesses have a high default rate, resulting in several executions being levied by money lenders, banks and NBIs for loan recovery. People have lost their cars, lands, and buildings and even then, the loans are still not liquidated,” he stressed.
Mr Ocansey pointed out that several businesses had been devastated because of excessive interest rates, and many more cases were in court because of loan default and called on government to offer the needed urgent attention.