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BoG committed no error in revoking UniCredit’s licence – Supreme Court

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The Supreme Court has affirmed the Bank of Ghana’s decision to revoke UniCredit Ghana Limited’s operating license.

The unanimous decision by the apex court overturns the Court of Appeal’s previous ruling and upholds the High Court’s initial decision from March 2021.

In August 2019, UniCredit Ghana Limited was declared insolvent by the Central Bank and had its license revoked under section 123 of the Banks and Specialised Deposit-Taking Institutions Act of 2016 (Act 930).

However, this decision was challenged by Hoda Holdings Limited, the majority shareholder of UniCredit, through an application filed at the Human Rights Division of the High Court.

The application sought judicial review of the Bank of Ghana’s decision and an injunction to prevent interference with UniCredit’s operations.

The Supreme Court panel, presided over by Chief Justice Gertrude Araba Esaaba Sackey Torkornoo and including Justices Mariama Owusu, Prof. Henrietta Joy Abena Nyarko Mensa-Bonsu, Ernest Yao Gaewu, and Yaw Darko Asare, unanimously affirmed that the Bank of Ghana had made no error in revoking UniCredit’s license.

The Bank of Ghana’s clean-up exercise in the banking sector took place from mid-2017 to January 2020.

This clean-up led to a reduction in the number of banks from 34 to 23, while 347 microfinance institutions, 15 savings and loans, and eight finance houses had their licenses revoked for various breaches, according to the Central Bank.

High Court Decision

On March 18, 2021, the High Court presided over by Justice Gifty Agyei Addo, ruled in favour of the Bank of Ghana, and held that from the evidence before the Court, UniCredit was insolvent prior to the revocation of its licence.

The Court found that contrary to UniCredit’s claim of not being given a hearing, the Bank of Ghana served UniCredit with numerous notices directing it to rectify its capital deficiency failing which the Bank of Ghana would exercise its powers under Section 123 of Act 930.

The Court further held that the Bank of Ghana committed no missteps in revoking the license of Unicredit. The High Court also affirmed that the steps taken by the Bank of Ghana to revoke the licence of UniCredit and place it under receivership was in accordance with Act 930.

Hoda Holdings Limited’s appeal to the Court of Appeal

Aggrieved and dissatisfied with the decision of the High Court, Hoda Holdings Ltd appealed to the Court of Appeal.

On July 7, 2022, the Court of Appeal comprising Justice Janapare A. Bartels-Kodwo, Justice Merley Wood and Justice G.S. Suurbaareh overturned the decision of the High Court and ruled in favour of Hoda Holdings Ltd.

The Court of Appeal held that the Bank of Ghana in revoking the licence of UniCredit under section 123 of Act 930 should have followed the steps provided in section 16(3&4) of Act 930.

The Court of Appeal further held that the failure of the Bank of Ghana to comply with the procedure in section 16(3&4) of Act 930 meant that UniCredit was not given a hearing before its licence was revoked.

Source: www.ghanaweb.com

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Banking

Cross border interoperability: Governor calls for effective collaboration between regulators, financial institutions, others

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The Governor of the Bank of Ghana, has called for effective collaboration between regulators, financial institutions, mobile money operators, FinTech innovators, and other stakeholders in Africa, saying, it is crucial to address technical challenges, ensure regulatory compliance, build trust, and drive the scalability and sustainability of cross-border mobile money and other interoperability initiatives.

According to him, by fostering a collaborative ecosystem, Africa can harness its FinTech advancements to unleash the full potential of interoperable mobile money systems, benefiting both individuals and countries across the continent.

Giving remarks at the Africa Prosperity Network 2024 Symposium on Retail Payment Interoperability, he said the need for a robust framework that enables seamless cross-border payment in Africa has remained central to most recent policy, development, and financial inclusion discussions.

This, he added underscores the enormous constraint faced on the continent and the quest for concrete actions to promote cross-border payment systems to achieve our shared aspirations

“We are living in a time where most African’s first interaction with the financial sector may be through their smartphones. We are also living in a time where Africa’s cross-border payments are costly, where sending $100 could end up being only $40 received in some of the most expensive corridors. You would agree with me that these two scenarios present an optimal opportunity for scaling up cross-border transactions on the continent. The good news however is that our financial future is filled with possibilities, and at the forefront of these advancements lies the interoperability of our payment systems”, the Governor continued.

He stressed that the concept of interoperable mobile money systems holds enormous potential for the establishment of comprehensive cross-border payment interoperability in the short-medium term.

As such, an efficient cross-border payment interoperability system can deliver seamless payments between buyers and sellers across African countries, as well as provide extensive inclusivity in expanding access to payment and financial services for the youth, vulnerable groups, and striving entrepreneurs.

‘This notwithstanding, achieving cross-border interoperable mobile money systems would require harmonised regulatory frameworks, consistent technical standards, and robust infrastructure. In addition, strong public-private partnerships, involving mobile network operators, financial institutions, FinTechs, and regulators would address technical challenges and ensure regulatory compliance”, the Governor intimated.

Other strategies that would ensure the adoption and long-term system reliability of cross-border payment interoperability, he said, include customer education and trust, scalability, and system sustainability, as well as inclusive access, which is essential for all segments of society, including rural and underserved populations.

He concluded on a positive note, saying, the foundational elements necessary to implement this idea of cross-border payment interoperability are partly in place in some African countries. These include regulatory sandbox programmes, progressive regulatory frameworks, and a dynamic FinTech sector, eager for growth opportunities. However, what may be lacking is collaboration among stakeholders

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Bank of Ghana clarifies role of FinTechs in remittance space

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The Bank of Ghana has clarified the role of FinTechs in the remittance space.

In an explainer on the remittance framework shared on the Bank’s social media handle, the Bank emphasized that the local FinTech companies authorised by the central bank do not mobilize FX from abroad.

Rather, it is the Money Transfer Organization based abroad that receive remittances from abroad.

The mobilized funds are then paid into the nostro account of the local partner banks with the FinTechs involved in the downstream payment to beneficiaries.

However, recent comments by some market watchers had wrongly blamed FinTechs for withholding FX abroad.

This erroneous impression is corrected by the BOG in the explainer. The confusion seems to stem from the mixing up of the role of MTOs and FinTechs. Watch the explainer.

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Banking

IEA advocates for extended term for BoG Governor to ensure continuity

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In a bold move aimed at bolstering Ghana’s economic stability, the Institute of Economic Affairs (IEA) is making a strong case for crucial amendments to the Bank of Ghana Act 2016.

Central to their proposal is the extension of the Governor’s tenure, ensuring continuity and independence from presidential terms.

Speaking at a Stakeholders’ Forum themed “Reviewing the Bank of Ghana’s Act to Promote Transparency, Accountability, and Effectiveness,” Senior Scholar Prof. Alexander Bilson Darku from the IEA emphasised the critical importance of safeguarding the Central Bank from governmental influence over the Governor’s terms and conditions.

He asserted that maintaining this autonomy is essential for upholding the effectiveness and independence of the regulatory institution.

“We began by examining the composition of the Bank of Ghana’s board, the governor’s appointment process, and the regulatory framework governing government lending limits,” he said.

“There was a consensus on the necessity for Ghana to carefully consider aligning the term of the Bank of Ghana Governor to overlap that the of President to ensure continuity and effectiveness in governance,” he added

Prof. Alexander Bilson Darku further explained that: “substantial discussion focused on enhancing the independence of the Bank of Ghana and its ability to effectively promote price stability, exchange rate stability, and economic development through sound policy measures”.

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