Beware of faceless loan companies

ü  The Bank of Ghana (BoG) has cautioned the public against taking loans from faceless loan companies

The Bank of Ghana (BoG) wants all Ghanaians to secure loans or deposit money only at properly licensed companies and avoid going to An official source said the fact that most of these loan companies choose to remain anonymous is enough warning that they are unregistered and unlicensed.

“People contemplating to take loans from such sources must beware and cross check if they are duly authorised. I will advise that they either call the BoG to cross check or they go to the website of the BoG,” explained the source.

It is common these days to see notices put mostly on trees, walls, at bus stops and other vantage points within Accra asking people to come for loans within 24-hours at no charge.

For most of such notices from the several loan companies that have emerged, they only provide telephone numbers and no other details. Their target is often people working in government institutions and sometimes other salaried workers.  

When Graphic Business contacted the BoG to ascertain if there are laws that regulate the activities of these faceless loan companies, an official said that it is proper for people to cross check any financial institution they intend to deal with in order to safeguard their hard earned money.

The entire city of Accra is engulfed by these posters. Most people take loans from these companies mostly when they are under duress so do not think of the consequences until they are required to pay back.

Majority of the loan companies do not have offices where they operate and meet their prospective clients at popular hang outs to transact their contract. Such transactions do not go through the procedures loans from the banks go through. The interest rates charged on these loans are exorbitant and could be as high as 300 per cent.

Some workers have been reduced to just work to service the loans they take without knowing when they would finish paying back.

Roland told Graphic Business about his experience with one of such loan companies. He said he took the loan when his child gained admission to senior high school and later realised the interest was too much, which made repayment difficult.

He said the persons involved took him to court but then upon a tip off, he challenged them to produce their business registration and taxes papers which they could not. “Up till now they have not called me again to demand their money”.

But how many Ghanaians can be that lucky to escape from the cruelty of such loan companies?

Meanwhile, the Bank of Ghana has developed new guidelines under which it hopes to regulate the operations of moneylenders and loan companies.

Under the guidelines, which were issued under the Non-Bank Financial Institutions Act, the activities of individuals and companies that engage in microfinance have been categorised into four tiers. This divides the different types of loan operators according to the capital they are required to have.

The guidelines cover cooperative saving groups, locally referred to as ‘susu’ companies, moneylenders and financial non-governmental organisations, which operate outside the supervision of the banking regulator.

Authorities said the guidelines will clean up the sector and prevent them from taking advantage of lenders.