Accra High Court Overturns Bank of Ghana’s License Revocation of CDH Savings and Loans
An Accra High Court has annulled the Bank of Ghana’s (BoG) 2019 decision to revoke the operating license of CDH Savings and Loans Company Limited, directing both parties to resolve the matter through arbitration.
Delivering the ruling on November 1, 2024, Justice Brew criticized BoG’s handling of the issue, emphasizing the importance of fair and reasonable administrative actions as enshrined in the constitution. The court found that BoG’s two-week deadline for CDH to liquidate assets in order to meet liquidity requirements was “unreasonable and unfair,” thus violating due administrative process.
The BoG had initially revoked CDH’s license on August 16, 2019, attributing the action to liquidity challenges allegedly arising from CDH’s inability to liquidate repossessed collateral. This liquidity shortfall, according to the BoG, impaired CDH’s capacity to meet depositors’ withdrawal demands, thereby threatening financial stability.
However, CDH’s shareholders, CDH Financial Holdings Limited, contested the revocation, arguing procedural unfairness and seeking arbitration to prevent further operational disruption. Their case emphasized that BoG’s actions, including the stringent timelines imposed, hindered CDH’s ability to adequately address the liquidity issues.
Justice Brew, citing Article 23 of Ghana’s 1992 Constitution, underscored the constitutional mandate for fairness in administrative actions, asserting that BoG’s approach failed to meet this standard.
The ruling potentially sets a precedent for the conduct of regulatory bodies, underscoring the need for balance and fairness in decision-making processes affecting financial institutions.
