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FINANCIAL INSTITUTIONS
(NON-BANKING) LAW, 1993 (PNDCL
328)
As amended
ARRANGEMENT OF SECTIONS
Section
1. Financial Institutions to be
incorporated in Ghana.
2. Financial Institutions to
obtain licences.
3. Minimum capital.
4. Bank of Ghana to issue licence.
5. Suspension or revocation of
licence.
6. Special powers of Bank of
Ghana.
7. Non-Bank Financial Institutions
to notify Bank of Ghana of
principal place of business, etc.
8. Non-Bank Financial Institutions
to display name and licence.
9. Change of Name to be approved.
10. Financial Institutions to
furnish regulations and
alterations.
11. Invitation to Public for
deposits.
12. Sale or Amalgamation of
business.
13. Bank of Ghana to have
supervisory authority.
14. Bank of Ghana to make rules.
15. Capital adequacy and liquidity
ratios.
16. Secretary to prescribe amount
of liquid assets.
17. Payment of dividends.
18. Financial Institutions not to
grant advances.
19. Financial Institutions to
submit returns to the Bank of
Ghana.
20. Bank of Ghana to submit annual
report.
21. Financial Institutions to keep
proper accounts.
22. Appointment of Auditors.
23. Auditors' Reports.
24. Financial Institutions to
submit audited reports to Bank of
Ghana.
25. Regulations.
26. Offence.
27. Interpretation.
28. Transitional provisions.
SCHEDULE
Schedule
IN pursuance of the Provisional
National Defence Council
(Establishment) Proclamation,
1981, this Law is hereby made:
Section 1—Financial Institutions
to be Incorporated in Ghana.
(1) No person shall carry on any
of the activities of the
non-banking financial institutions
set out in the Schedule to this
Law unless it is incorporated in
Ghana.
(2) The Secretary may, on the
recommendation of the Bank of
Ghana by legislative instrument
amend the Schedule to this Law.
Section 2—Financial Institutions
to obtain Licences.
(1) Subject to the provisions of
this Law no non-bank financial
institution shall carry on any of
the businesses set out in the
Schedule unless it is licensed
under this Law.
(2) An application for a licence
shall be made in the prescribed
form to the Bank of Ghana and
shall be accompanied by such
particulars or information as may
be required by the Bank of Ghana.
(3) There shall be paid in respect
of every licence granted under
this Law such fee as may be
determined by the Bank of Ghana.
Section 3—Minimum Capital.
No non-bank financial institution
shall be licensed unless it
maintains a minimum paid-up
capital of one hundred million
cedis or such amount as the Bank
of Ghana may, after consultation
with the Secretary, by executive
instrument prescribe.
Section 4—Bank of Ghana to issue
Licence.
(1) The Bank of Ghana may issue a
licence to any non-bank financial
institution which complies with
the provisions of this Law
relating to application and
eligibility for a licence.
(2) A licence under this Law shall
be issued upon such terms and
conditions as the Bank of Ghana
may determine.
Section 5—Suspension or Revocation
of Licence.
(1) The Bank of Ghana may suspend
or revoke the licence of any
non-bank financial institution if
it is satisfied that it—
(a) obtained the licence by fraud
or mistake;
(b) has contravened any provision
of this Law or any terms or
conditions upon which the licence
is granted;
(c) has engaged in undesirable
methods of conducting the business
in respect of which the licence is
issued; or
(d) has failed to maintain the
minimum paid-up capital.
(2) The Bank of Ghana shall,
before suspending or revoking the
licence of any non-bank financial
institution notify the institution
in writing of its intention.
(3) A non-bank financial
institution notified under
subsection (2) may within the
period of one month from receiving
the notice, petition the Secretary
in writing against the suspension
or revocation.
(4) If a non-bank financial
institution which has been
notified of the Bank of Ghana's
intention to suspend or revoke its
licence fails to lodge with the
Secretary its petition or having
lodged the petition withdraws it
before the Secretary gives his
decision on it the Secretary may
suspend or revoke the licence and
notify the institution
accordingly.
(5) Any non-bank financial
institution aggrieved by a
decision of the Secretary on a
petition lodged with him may
appeal to the High Court.
Section 6—Special Powers of Bank
of Ghana.
Without prejudice to section 5 of
this Law, where the Bank of Ghana
is satisfied that a non-bank
financial institution—
(a) is not carrying on its
business in the interest of its
depositors or creditors; or
(b) has insufficient assets to
cover its liabilities,
the Bank of Ghana may after
consultation with the Secretary—
(i)
direct the institution to take
such steps as the Bank of Ghana
may consider necessary to deal
with the situation;
(ii) prohibit the receipt by the
institution of any fresh deposits;
or
(iii) suspend or revoke the
licence of the institution.
Section 7—Non-Bank Financial
Institutions to Notify Bank of
Ghana of Principal Place of
Business, Etc.
(1) A non-bank financial
institution shall notify the Bank
of Ghana of the location of its
principal place of business,
branch or agency in Ghana.
(2) If a non-bank financial
institution changes the location
of its principal place of
business, branch or agency it
shall within twenty-one days of
the change notify the Bank of
Ghana in writing.
Section 8—Non-Bank Financial
Institutions to display Name and
Licence.
(1) A non-bank financial
institution shall display
conspicuously and in easily
legible letters at the entrance of
its principal place of business,
its name and a statement of the
fact that it is licensed to carry
on business under this Law.
(2) The statement shall indicate
whether the institution takes
deposits or not.
Section 9—Change of Name to be
Approved.
(1) No non-bank financial
institution shall, without the
approval of the Bank of Ghana
change its name as licensed.
(2) No non-bank financial
institution shall for the purposes
of the business for which it is
licensed under this Law use or
refer to itself—
(a) by a name other than the name
under which it is licensed; or
(b) by an abbreviation of that
name unless the abbreviation has
been approved by the Bank of
Ghana.
Section 10—Financial Institutions
to Furnish Regulations and
Alterations.
(1) A non-bank financial
institution shall furnish the Bank
of Ghana with—
(a) the regulations or other rules
for the conduct of its business;
(b) every change of a director of
the business occurring within
twenty-eight days of being
licensed or of the change as the
case may be.
(2) A non-bank financial
institution shall furnish the Bank
of Ghana with every alteration in
its regulations or rules or every
change of its business not less
than three months before the date
of the coming into effect of the
alteration or change.
Section 11—Invitation to Public
for Deposits.
(1) Notwithstanding section 265 of
the Companies Code, 1963 (Act 179)
a non-bank financial institution
may make invitations to the public
to deposit money with it for fixed
periods payable at the discretion
of the institution.
(2) The Bank of Ghana may, if it
considers it necessary in the
interest of the public to do so
give directions to non-bank
financial institutions either
generally or to any particular
financial institution in respect
of any matters relating to or
connected with the receipt of
deposits including rates of
interest payable on such deposits
and the periods for which deposits
may be received.
(3) The Bank of Ghana may in the
case of non-compliance with the
directions by any financial
institution prohibit the
acceptance of deposits by that
financial institution.
Section 12—Sale or Amalgamation of
Business.
A
non-bank financial institution
shall submit to the Bank of Ghana
for approval any arrangement or
agreement which it proposes to
enter into for the sale or
disposal by amalgamation or
otherwise of its business.
Section 13—Bank of Ghana to have
Supervisory Authority.
Subject to the provisions of this
Law the Bank of Ghana shall have
supervisory authority in all
matters relating to the businesses
of any non-bank financial
institution licensed under this
Law.
Section 14—Bank of Ghana to make
Rules.
(1) The Bank of Ghana may, without
prejudice to any of its functions
under this Law make rules not
inconsistent with the provisions
of this Law, for the proper
functioning of all non-bank
financial institutions licensed
under this law.
(2) All non-bank financial
institutions shall comply with the
rules made under subsection (1) of
this section.
Section 15—Capital Adequacy and
Liquidity Ratios.
(1) Every non-bank financial
institution which takes deposits
from the public shall at all times
hold unimpaired owned funds which
in aggregate are not less than ten
per cent of risk assets of the
institution.
(2) The Bank of Ghana may in
consultation with the Secretary
and in the public interest by
legislative instrument vary the
level of the owned funds to the
risk asset of deposit taking
non-bank financial institutions.
Section 16—Secretary to Prescribe
Amount of Liquid Assets.
(1) The Secretary may by
legislative instrument on the
recommendation of the Bank of
Ghana make regulations to
prescribe—
(a) the amount of liquid assets to
be held by a non-bank financial
institution; and
(b) that the amount may be a
percentage of all its deposit
liabilities,
and may also prescribe different
percentages for different classes
of deposits or assets.
(2) Regulations shall make
provision for the payment of
penalties for contravention by a
non-bank financial institution of
subsection (1) of this section.
Section 17—Payment of Dividends.
(1) No non-bank financial
institution shall declare or pay
any dividends on its shares in any
one year if the level of capital
adequacy of the institution is
less than that provided for by
regulations made under this Law.
(2) Regulations shall make
provision for the payment by
directors of financial
institutions of penalties for the
contravention of subsection (1) of
this section.
(3) No non-bank financial
institution shall pay any dividend
on its shares unless it has
completely recovered all its
capitalised expenditure.
(4) In this section "capitalised
expenditure" includes preliminary
expenses, share selling
commission, brokerage losses
incurred by the financial
institution, and any other item of
expenditure not represented by
tangible assets.
Section 18—Financial Institutions
not to grant Advances.
(1) No non-bank financial
institution shall grant any
advance or credit or undertake any
financial guarantee or indemnity
to or in respect of any one person
or group of persons or invest in
the equity of any company or carry
out any other transaction for any
person or group of persons which
constitutes in the aggregate a
liability to the institution
amounting to more than fifteen per
cent of the net worth of the
institution.
(2) No non-bank financial
institution shall, in the case of
an unsecured advance, credit,
financial guarantee or indemnity
grant any advance, credit, or
undertake any guarantee or
indemnity amounting in aggregate
to more than ten per cent of the
net worth of the institution.
(3) Subsection (1) of this section
shall not apply to transactions
between non-bank financial
institutions or between a non-bank
financial institution and a bank
incorporated in Ghana.
Section 19—Financial Institutions
to Submit Returns to the Bank of
Ghana.
(1) Every non-bank financial
institution shall submit to the
Bank of Ghana—
(a) not later than twenty-one days
after the last day of every
quarter a statement in such form
as may be determined by the Bank
of Ghana showing the institution's
assets and liabilities as at the
close of business on the last day;
(b) in such form and within such
time as the Bank of Ghana may
specify such other particulars as
the Bank of Ghana may require.
(2) The information in subsection
(1) (a) shall be made public in
the case of deposit taking
institutions.
Section 20—Bank of Ghana to submit
Annual Report.
The Bank of Ghana shall, within
three months after the end of each
financial year, submit to the
Secretary a report on the
activities of all non-bank
financial institutions licensed
under this Law.
Section 21—Financial Institutions
to keep Proper Accounts.
A
non-bank financial institution
shall keep books of accounts and
proper records in relation to all
transactions of the institution.
Section 22—Appointment of
Auditors.
(1) A non-bank financial
institution shall appoint an
auditor who will audit its account
books and records at least once in
every year.
(2) No person shall be appointed
an auditor under subsection (1)
unless—
(a) he is a member of the
Institute of Chartered Accountants
under the Chartered Accountants
Act, 1963 (Act 170);
(b) he is a practising accountant
within the meaning of that Act;
(c) he is resident in Ghana or if
not so resident, his residence
outside Ghana has been
specifically approved in writing
by the Bank of Ghana in
consultation with the Secretary;
and
(d) he is not disqualified by any
law in force in Ghana or in any
other country from being appointed
as auditor.
Section 23—Auditors' Reports.
(1) An auditor shall submit a
statutory audit report and a long
form audit report to the
institution that appointed him.
(2) The auditor shall state in his
statutory report whether or not—
(a) the accounts give a true and
fair view of the state of affairs
of the financial institution;
(b) he was able to obtain all the
information and explanation
required by him for the efficient
performance of his duties; and
(c) the financial institution's
transactions are within the powers
of the institution.
Section 24—Financial Institutions
to Submit Audited Reports to Bank
of Ghana.
(1) A non-bank financial
institution shall submit a copy of
its audited accounts to the Bank
of Ghana.
(2) Any person who so desires may
request for a copy of the audited
accounts of a non-bank financial
institution from the Bank of Ghana
and the Bank of Ghana shall, upon
payment of a fee by the person,
give him a copy of the report.
Section 25—Regulations.
Except as otherwise provided in
this Law the Secretary may by
legislative instrument make
regulations—
(a) to prescribe—
(i)
capital adequacy, liquidity ratio
and other prudential requirements
of financial institutions;
(ii) the procedures for the risk
management of financial
institutions; and
(b) for giving full effect to this
Law.
Section 26—Offence.
Any person—
(a) who operates any of the
activities of the non-bank
financial institutions set out in
the schedule without a licence;
(b) who in connection with an
application for a licence wilfully
or knowingly gives any information
which is false or misleading in a
material particular,
commits an offence and shall be
liable on conviction to a fine not
exceeding one million cedis or to
imprisonment for a term not
exceeding two years or to both.
(2) Where an offence under this
Law is committed by a body of
persons—
(a) in the case of a body
corporate other than a partnership
every director or officer of that
body shall also be deemed to be
guilty of that offence; and
(b) in the case of a partnership,
every partner shall also be deemed
to be guilty of the offence.
(3) No person shall be deemed to
be guilty of an offence by virtue
of subsection (2) of this section
if he proves that the offence was
committed without his consent or
connivance by a person other than
himself and that he exercised all
due diligence to prevent the
commission of the offence having
regard to all the circumstances.
Section 27—Interpretation.
In this Law unless the context
otherwise requires—
"Council" means the Provisional
National Defence Council;
"financial institution" or
"institution" or "non-bank
financial institution" means any
non-banking institution which
carries on the business of or part
of whose business is any of the
following activities—
(a) taking of deposits;
(b) financing of any activity by
way of making loans or advances or
otherwise, other than its own;
(c) companies not otherwise
regulated under the Securities
Industry Law dealing in shares,
stocks, bonds, debentures, or
securities issued by the
Government or a company or other
marketable securities;
(d) leasing, letting or delivering
of goods to a hirer under a hire
purchase agreement;
(e) carrying on by insurance
companies of any business other
than insurance;
"Owned funds" means paid up
capital plus free reserves, net of
losses and unprovided for
depreciation or diminution of the
value of the assets of a financial
institution;
"Secretary" means the Provisional
National Defence Council Secretary
responsible for Finance.
Section 28—Transitional
Provisions.
Notwithstanding any enactments to
the contrary any financial
institution in existence before
the coming into force of this Law
shall within three months
thereafter, apply to the Bank of
Ghana for a licence.
SCHEDULE
1. Discount Companies
2. Finance Houses
3. Acceptance Houses
4. Building Societies
5. Leasing and Hire-Purchase
Companies
6. [Deleted by Venture Capital
Trust Fund Act, 2004 (Act 680) s.
29].
7. Mortgage Financing Companies
8. Savings and Loans Companies
9. Credit Unions.
Made this 5th day of January,
1993.
FLT.-LT. JERRY JOHN RAWLINGS
Chairman of the Provisional
National Defence Council
Date of Gazette Notification: 21st
May, 1993.
amended by
VENTURE CAPITAL TRUST FUND ACT,
2004 (ACT 680)
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