- Savings and Loans Sector Charts New Course, Advocates Common Clearing House with Finance Houses
- GHASALC’s Strategic Priorities to Revamp Non-Bank Financial Landscape in Ghana
The Ghana Association of Savings and Loans Companies (GHASALC) has unveiled a series of strategic regulatory priorities designed to reshape the landscape of the Savings and Loans (S&Ls) and Finance Houses sector in the country. At the forefront of these priorities is the establishment of a pioneering common clearing house, aimed at boosting efficiency and reducing risk within the Specialised Deposit-Taking and Non-Bank Financial Institution (SDI-NBFI) market.
Tweneboah Kodua Boakye, Executive Secretary of GHASALC, emphasized the importance of this move, stating that the clearing house would act as a vital intermediary institution. By facilitating seamless transactions and managing the clearing and settlement of trades, the common clearing house is set to centralize risk management, ensure timely trade completion, and mitigate counterparty risk.
The significance of leveling the playing field between universal banks and non-bank institutions was a prominent theme in Boakye’s statement. He noted that currently, universal banks enjoy overnight lending benefits due to the presence of a national clearing house. GHASALC envisions that extending a similar mechanism to non-bank institutions would enable equal opportunities for S&Ls and finance houses to engage in overnight lending.
GHASALC also disclosed plans for a merger with finance houses, citing synergies in operations and combined assets surpassing GH¢8 billion. This strategic consolidation is expected to enhance industry coordination and amplify the collective voice of these entities, solidifying their position in the financial landscape.
However, GHASALC voiced concerns regarding regulatory challenges that non-bank institutions face. These challenges stem from regulatory requirements similar to those imposed on commercial banks under the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930). While acknowledging the effectiveness of the act, GHASALC stressed the need for a more nuanced approach to address the unique characteristics of non-bank entities.
The association called for the introduction of a distinct legal instrument tailored to non-banks, similar to the provisions in place for rural banks, even though they fall under the jurisdiction of Act 930. GHASALC believes this tailored approach would create a more favorable environment for growth and compliance in the non-bank sector.
Furthermore, GHASALC highlighted the importance of developing a national microfinance policy. The association anticipates that this policy will provide comprehensive guidelines for the sector’s operations, offering much-needed direction and regulatory clarity.
With 25 members overseeing over seven million customer accounts and combined assets of approximately GH¢5.7 billion, GHASALC wields substantial influence within the SDI-NBFI market. These members operate through a vast network of over 570 business outlets spanning all 16 regions of Ghana, collectively employing over 7,000 staff.
As GHASALC advances its visionary regulatory priorities, the Ghanaian financial landscape stands on the cusp of transformation, with implications reverberating through both non-bank and traditional banking sectors alike.
