The Bank of Ghana (BoG) has cautioned financial institutions across the country not to use unethical means for recovering loans from clients.
“Any financial institution caught in this act will be sanctioned. Be transparent in your dealings when it comes to borrowing,” said Godfred Cudjoe, Head-Credit Reporting Unit, Financial Stability Department-BoG.
He was speaking to B&FT on the sidelines during a two-day training workshop for some selected journalists in the Western and Western North Regions at Takoradi.
He advised banks and other banking institutions – including rural banks, microfinance companies and micro creditors – to desist from chasing deceased borrower’s families for loan repayments when insurance was paid as part of loan fees.
“Borrowers should not run away when they are not able to repay loans; rather, walk to the financial institution and explain to them why you are unable to repay. This will enable them to restructure the mode of payment for you,” he suggested.
Applying for loans
He explained that before an individual enters into an agreement when borrowing, there is a need to read and understand all key features of the product.
“Before you decide to take a loan, you should read the terms and conditions of the product and they should be in line with your needs. We need to be educated that certain products that will favour me may not favour others,” he said.
Also, Cudjoe mentioned that before a loan is taken, individuals need to negotiate the interest rate based on creditworthiness.
He pointed out that a pre-agreement truth document should be given before a loan is taken. “This spells out key facts about the loan or summarises the main agreement with an outline of the facility’s key features and conditions.”
He added that the Annualised Percentage Rate (APR) must be looked at as a customer to understand the loan’s tenure.
He further advised that anyone who is willing to guarantee a loan should know the person very well before any document is signed.
