Stakeholders in the banking industry have welcomed the introduction of new regulations to protect consumers in financial sector.
The law when introduced will make it obligatory for financial institutions to inform a loan applicant on allowable loan amount, terms of payment with the exact interest on the loan being applied for and also inform the loan applicant how much the annual percentage rate is.
The new law will be regulated by the Bank of Ghana only.
Head of the Osei Tutu II Centre for Executive Education & Research (OTCEER) Nana Otuo Acheampong says the new regulation is good for the industry and consumers.
“Is good for the industry especially the consumers of credit facilities from financial institutions because is required that when you are giving a loan to a customer you let them know the annual percentage rate of the loan but not the simple interest rate. So that is the difference between the two. The annual percentage rate is the effective interest rate that you pay on a loan as opposed to the simple interest rate that they quote on a loan.”
Nana Otuo Acheampong however expressed shock at how long it has taken BOG to introduce such regulation because “the regulation is seven years overdue”.
He says the Credit Reporting Act (ACT 276) was passed in 2007 and in section one among other things the Bank of Ghana is required to maintain proper standard and acceptable credit reporting practices and also make regulations and rule for institutions under the act. BOG again was to take measure to protect the interest of credit information subject that is borrowers, impose penalty for contravention of the act and establish a credit department that will be directly responsible for the acts implementation.
Meanwhile Customers of banks have welcomed the new regulation to protect consumers in the financial sector. Some of the customers believe the new regulation would add on to the portfolio of the customers service managers of the banks to give further and better explanation on the terms of loans they give out and could help reduce the high levels nonperforming loans in the country.
