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Borrowers and Lenders Bill before Parliament

By Jeorge Wilson KINGSON

Parliament is set to pass the Borrowers and Lenders bill before Parliament’s last sitting in November. The bill which was presented on October 17, 2008 entered its consideration stage last week and expected to receive overwhelming support from the Members of Parliament to culminate into its passage into law.

The finance committee of the House which examined the bill has recommended it saying “it will help bring sanity to the relationship between borrowers and lenders who deal at arms length”.

The purpose of the bill is to provide an improved legal framework for credit lending; to improve standards of disclosure of information by borrowers and lenders to prohibit certain credit practices; promote a consistent enforcement framework related to credit and to provide for related matters.

The bill contains some consumer protection mechanisms that will ensure that borrowers are able to exercise their rights without being penalized or made to suffer other detriments by creditors.

The borrowers and lenders bill, when passed is expected to empower the Bank of Ghana or its authorized agents to inspect the books, accounts, documents and transactions of lenders, borrowers or employers to ensure compliance.

It will generally improve the credit relationships between lenders and borrowers as well as encourage lenders to provide more credit to consumers. According to the finance committee’s report, people who have interest in a charge are required to register a certified copy of the charge with the registrar of charges and collaterals within twenty eight days after creation of the charge.

The committee proposed some amendments which are expected to be effected before the bill is finally passed. Credit relationships between lenders and their customers are subject to a number of general laws which include the contracts act, 1960 (Act 25), mortgage act, 1972 (NRCD 96), home mortgage finance act, 1993 (PNDCL 329), hire purchase act, 1974 (NRCD) 292), chattels transfer act 1952 (Act 51), the companies act, 1963 (Act 179) and the finance lease act, 1993 (PNDCL 331), inter alia.

These laws provide generally for certain aspects of the rights and obligations of parties to a credit agreement. The lenders and borrowers bill, 2008 will build on these pieces of legislation which apply to different aspects of credit relationship in order to promote greater disclosure and consistent enforcement framework.

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