The Bank of Ghana has directed banks and Specialized Deposit-Taking institutions to desist from charging some fees and charges, as well engaging in some practices it describes as unfair to the banking populace.
The fees and charges, and practices identified by the central bank as unfair include, Credit Insurance Premium Overcharges, Maintenance Fees on Savings Account, Over the Counter (OTC) Withdrawal Charges as well as the requirement by some banks for borrowers to make them part owners in some assets they present for use as collateral for loans.
On Credit Insurance Premium Overcharges, the Central Bank says while it acknowledges the importance of holding credit insurance against eventualities such as death, permanent disability, and termination of employment, as a loss mitigating norm in credit management, a number of banks and SDIs take advantage of this, to overprice the premiums charged to customers, resulting in the increased cost of borrowing.
It said going forward, banks and SDIs that opt to use their pre-determined insurance companies to underwrite borrowers’ loans, shall apply the same premium charged by the underwriting company to borrowers.
Banks and SDIs are also not permitted to retain insurance premiums collected from customers with the intention of implementing an internal insurance policy. This however excludes commissions for Bancassurance arrangements.
Banks and SDIs have also been directed to desist from charging “Account Maintenance Fees” on savings accounts. The Bank of Ghana goes on to state that the application of “Account Maintenance Fees” by Banks and SDIs on savings accounts inhibits deposit mobilisation and discourages the use of banking systems by the public. This bank, however, does not include charges for services provided by banks and SDIs with the explicit prior subscription by customers.
Concerning Over the Counter (OTC) Withdrawal Charges, the Central Bank has also abolished the same. The authority notes that some banks and SDIs impose penal charges on customers who withdraw their own funds from the banking halls of affected banks and SDIs. The reason commonly attributed to this practice it says is to encourage customers to use digital platforms provided by the banks/SDIs for such withdrawals, in order to decongest banking halls.
While the Bank of Ghana acknowledges the support of banks and SDIs in the digitization agenda, this action it says deters some customers, especially those who are averse to the use of digital platforms, from opening and operating accounts.
The Bank of Ghana has therefore directed Banks and SDIs to desist from levying penalties on customers who withdraw their own funds below certain thresholds from the banking halls.
In addition, banks and SDIs shall also not levy penalties against customers who request account balances within banking halls.
The practice where Banks and SDIs require borrowers who secure credit facilities with movable assets, to transfer ownership of such assets into the joint names of the borrower and the Bank or SDI involved, according to the bank of Ghana is contrary to section 7 of the Borrowers and Lenders Act, 2020 (Act 1052) which does not permit a security interest to operate as a transfer of title from a borrower to a lender.
Banks and SDIs are henceforth barred from engaging in the practice of changing ownership of collaterals presented by borrowers to secure credit facilities from the borrower to the bank or SDI.
Application of interest on Penal Charges as well as the Quotation of Monthly Interest Rates on Credit Facilities have also been abolished.
The Bank of Ghana finally expressed concern with the lack of compliance with the requirement of banks and SDIs to obtain full personal details of a person who makes a deposit into or withdrawal from an account on behalf of another person.
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