The High Court (Human Rights Division) has overturned the Bank of Ghana’s (BoG) decision to revoke the operating licence of Ideal Finance Limited.
Delivered on Monday, March 10, the ruling marks a major victory for the once-defunct financial institution in its ongoing battle against the central bank.
The court concluded that the Bank of Ghana had failed to follow the appropriate legal procedures before revoking Ideal Finance’s licence, rendering the action unjustified. As a result, the court has effectively restored the company’s legal standing, allowing it to resume operations.
The Bank of Ghana had revoked Ideal Finance’s licence as part of its comprehensive financial sector cleanup initiative, citing insolvency and poor governance as the primary reasons for its action.
However, the High Court found that the BoG did not exhaust the required processes before making its decision, leading to the quashing of the revocation.
On August 16, 2019, the Bank of Ghana revoked the operating licences of 23 financial institutions, including Ideal Finance, GN Savings and Loans, First Allied Savings and Loans, Midland Savings and Loans, and Unicredit Savings and Loans.
The central bank justified its sweeping measures by stating that these institutions had remained insolvent despite being given sufficient time to recapitalise.
The BoG’s financial sector cleanup exercise was aimed at restoring stability and confidence in the banking system, particularly after concerns over the sustainability of certain institutions.
However, the cleanup led to the closure of numerous banks and financial companies, leaving depositors and other stakeholders in financial turmoil.
While the Bank of Ghana’s actions were intended to strengthen the industry in the long term, they have faced significant opposition from affected institutions and their clients.
Ideal Finance’s successful challenge to the revocation could set a precedent for other legal battles, raising questions about the transparency and fairness of the central bank’s regulatory procedures.
The High Court’s decision to quash the revocation of Ideal Finance’s licence could have wider ramifications for the Bank of Ghana’s future actions within the financial sector.
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