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ARE DIRECTORS, MANAGEMENT AND STAFF BE BLAME FOR FAILURE OF BANKS IN GHANA?    By Atta George  Peprah



Ghana’s banking sector has gone through many difficulty in their operations these days, which has led to most bank in the country not meeting their capital requirements as set by the bank of Ghana and recent collapsed of the seven indigenous banks in our country.
According to my point of view most the bank collapsing are as a result of failure on part of directors, management and staff of the banks.           
STAFF                                                 
Information flow is at the core of every management system, public or private and the correct interpretation of information is a critical attribute of an effective manager. Such interpretation is the basis of all rational decisions, which is the essence of management. Therefore, information must be considered vital resources at the personal, organizational and national level. Information is a product of processing (analysis and synthesis) of factual data.  Some staff at the bank deliberately or intentionally refused to record the loan into proper documents, where even if he or she is transferred or sack, the replacement staff may not get access to the loan documents.

DIRECTORS

 It is not uncommon for Directors to loan money to a proprietary limited company which they are on the board of or where they are related to the major shareholders.  In most of these cases the Director is also a representative of the shareholder.  In a lot of cases, there is no express written terms of the loan and where there are multiple directors that represent all equity holders, they have all contributed funds equally.  Subsequently the question often arises as to whether or not the loan is repayable on demand.   Most of the appointed CEO gives loan to their directors in order to feel secure at post. Some give loan to directors without interest.                                       

MANAGEMENT AND FAMILY
There is one all-important point to bear in mind in any situation like the one you are envisioning: whenever money is loaned, the relationship between the parties involved changes. It is no longer simply brother, sister, father to son, or friend to friend but it is borrower to lender. As a matter of fact, the Bible says that the borrower becomes a slave to the lender (Proverbs 22:7). That may sound harsh, but it is accurate. When you lend money to a family member, you have introduced another level of complexity into the relationship.
If a member of your family is in need, we would suggest that you seriously consider the option of giving him the money. Work must be separated from family, but most of the staff gives loan to their family which they find it difficult collecting because he or she may be father, in-law, wife, husband. In Ghana we are mostly tied by our family members. A case study where a staff give loan to the husband or wife. What is the probability of paying back the loan?

CUSTOMERS

Loan agreement will often have a clause requiring monies to be used for a specific purpose, for example to purchase a property or to carry out a specific project. This may sound like an obvious or even rather innocuous provision to have in a contract, but it is there for very good legal reasons and failure to include it can have some far-reaching consequences for the lender.  Let’s say Mr. Kwasi Manu will collect a loan from the bank instead of using the loan for the purpose of giving the loan for, he or she will not use it for other purpose. It is the duty of the banks to educate their lenders.

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