Bankers: Judicial system making loan recovery difficult

John Awauh, the executive secretary of the Ghana Bankers Association (GAB) has said the judicial system in the country is fraught with inefficiencies that do not allow banks to recover loans effectively.

Speaking to Nana Oye Ankrah on Tuesday (19 April), Awuah said: “We have serious challenges with the judicial system. It’s not just the courts, it’s the whole system; the lawyers who practice within the judicial sections, I don’t know whether to say the judges. The entire court process is fraught with inefficiencies and … that allow lawyers to extend the life of litigation beyond reasonable limits….”

Awuah’s comments come after the Bank of Ghana (BoG) directed banks and other non-bank financial institutions (NBFIs) to always inform borrowers in clear terms that they could be sued to recover funds in the event of default.

The central bank said although lenders had the right to enforcement under the Borrowers and Lenders Act 2020, Act 10 (52) and other applicable laws, some borrowers were unaware of same.

In a notice to the general public, BoG reminded the lenders and the borrowers alike that Act 1052 provided a regime for the rights and obligations of borrowers and lenders.

The executive secretary of the Ghana Bankers Association said the move by the BoG is a step in the right direction adding that: “The banks are aware of our rights in the lending arrangements. Unfortunately, in spite of the fact that under Act 10(52) banks to proceed to recover from the collateral that supports the facility without resorting to court.”

“We had a lot of instances where as soon as a bank initiates the process to depose of an asset in respect of a debt, you’d find the borrowers running to the courts and the courts have been seen to be accommodating in spite of the fact that provisions under the Act 10(52) clearly mandates the bank to do that,” he said. 

Awuah added: “The danger with that kind of process is that it unnecessarily elongates the process of recovery…”

Source: asaaseradio