BoG introduces more measures to firm up financial sector

Business News of Monday, 28 May 2018



Elsie Addo AwadziElsie Addo Awadzi – Second Deputy Governor, Bank of Ghana

The Bank of Ghana (BoG) has introduced a number of measures aimed at making the financial sector stable and strong. This includes an amended Deposit Protective Scheme set to be rolled out by January 2019 to give depositors more confidence in banks, the Second Deputy Governor of the BoG, Mrs Elsie Addo Awadzi, has said.

“Recently we had the Act amended to establish trust. We have the objective of ensuring that the banks are safe and also the deposits that they hold; and out of that we established a depositors’ protective scheme,” she stated.

She said further that the BoG had put in more measures to ensure that Ghana had a strong financial sector, which included the bank’s issuance of a corporate governance directive to promote better financial standards in the sector.

Mrs Awadzi was speaking at the recent GRAPHIC BUSINESS/Stanbic Bank Breakfast Meeting series in Accra .

It was on the theme: “Liquidity and Solvency Management – Boosting the Health of Banking in Ghana.”

She indicated that the BoG had the mandate of ensuring a stable financial system in Ghana, which in turn was critical to the survival of the entire economy and its development.

“We are working hard for a strong financial sector that works for everybody,” she assured.

Assets of financial sector

According to Mrs Awadzi, 85 per cent of the assets of the financial sector was made up of the banking sector, which meant that if the banking sector was not strong, then the entire financial sector was at risk.

She said a lot of lessons had been learnt by the central bank from the global financial crunch in 2008.

Those lessons, she said, had informed certain policies such as the opening of banks with the relevant capital to promote better standards in the sector.

All banks are required to pay a new minimum capital requirement of GH¢400 million per the BoG’s directive by December this year.

“We are coming up with bank holding companies so that activities in the banks are regulated,” Mrs Awadzi added.

Financial statements

Speaking to the concerns of participants on the mandatory publication of annual financial statements by banks to inform customers, Mrs Awadzi said most banks were already publishing them in the newspapers.

She, however, acceded that the defunct UT and Capital banks had not been doing that for a number of years before they became insolvent, saying: “The financial statement is the true financial health of a bank.”

Mrs Awadzi noted that although a Credit Bureau System had been put in place to monitor the performance of banks, many financial institutions had not subscribed to it. “But the issue has been taken to Parliament to compel all banks to comply. So we want to really attack it in a holistic manner,” she said.

Mrs Awadzi admitted that the insolvency of banks such as the UT and Capital banks was the result of the lack of enforcement of regulations by the BoG, but “there will not be forbearance anymore”.

Addressing the issue of consumer protection raised at the event, Mrs Awadzi said the BoG had created a market conduct office and introduced a complaints hotline.

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