The Bank of Ghana (BoG) has directed banks and Specialized and Deposit-Taking Institutions (SDIs) to desist from charging “Account Maintenance Fees” on savings accounts.
The ban does not include charges for services provided by banks and SDIs with the explicit prior subscription by customers.
A statement issued in Accra by the Bank’s Secretary, Sandra Thompson, said the application of “Account Maintenance Fees” by banks and SDIs on savings accounts inhibits deposit mobilisation and discouraged the use of banking systems by the public.
The BoG noted that the application of such fees had driven a number of savings accounts into debit and eroded the deposits of vulnerable depositors who would generally expect their savings accounts to earn interest.
“This practice is detrimental to financial inclusion and negates the gains of the financial literacy programmes geared towards promoting personal savings,” the statement added.
On Over the Counter (OTC) withdrawal charges, the Central Bank noted that some banks and SDIs impose penal charges on customers, who withdraw their own funds from banking halls of affected banks and SDIs.
It said the reason commonly attributed to this practice was to encourage customers to use digital platforms provided by the banks/SDIs for such withdrawals to decongest banking halls.
However, these digital platforms are not offered for free.
While the Bank of Ghana acknowledged the support of banks and SDIs in the digitization agenda, it said such an action deterred some customers, especially those who were averse to the use of digital platforms, from opening and operating accounts.
It said the practice also negatively affected the financial inclusion drive of the Bank, 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 not levy penalties against customers, who request account balances within banking halls,” it added.
In the area of change of ownership of collateral Documents, the BoG said some banks and SDIs required 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.
The statement said in addition, borrowers were made to bear the cost associated with the transfer prior to loan approval and after settlement of loan.
It said the practice of some of the banks and SDIs was contrary to section 7 of the Borrowers and Lenders Act, 2020 (Act 1052).
The Act does not permit a security interest to operate as a transfer of title from a borrower to a lender.
The practice further denies borrowers the opportunity to secure multiple loans with a single collateral duly registered in the name of the respective borrowers.
The statement said banks and SDIs were 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.
It said the Central Bank had observed a practice among some banks and SDIs, where penal interest rates levied against defaulting loan customers, were made to accrue interest.
In effect, interest is computed on penal charges in addition to interest on the outstanding loan amount.
The statement said banks and SDIs that opted to use their pre-determined insurance companies to underwrite borrowers’ loans, shall apply the same premium charged by the underwriting company to borrowers.
The banks and SDIs are not permitted to retain insurance premiums collected from customers with the intention of implementing an internal insurance policy.