Despite a plea by undercapitalized indigenous banks for the extension of the deadline to raise the new minimum capital by December2018, the Bank of Ghana is insisting on its directive.
Commercial banks are to raise GHS 400 million by the end of this year, more than a 300 percent increment from the current GHS120million.
Earlier this month, the Association of indigenous banks appealed to the president to intervene for an extension of the deadline to 2022. They claimed the time is too short a period to meet the new target.
According to them, the implementation of the current deadline will only pave way for bigger foreign banks to take over all the small and weak capitalized local banks
However, the BoG says it expects all banks to comply with the requirement.
“It remains our view that this new capital floor will help make banks stronger and resilient, and position them to better support the Ghanaian economy,” said Mrs Elsie Addo Awadzi, Second Deputy Governor at the Bank of Ghana at a breakfast meeting held in Accra.
The BoG has therefore urged under capitalized banks to consolidate to become stronger.
Although generally strong, the Central Bank has revealed that there are a few pockets of vulnerability in the banking sector, which they say are being monitored on an active basis to ensure that depositors’ funds are protected.
The BoG has also expressed worry over the abuse of its Emergency Liquidity Assistance (ELA).
Awadzie said “to avoid such undue reliance on ELA with attendant moral hazard risks and credit risks for the Bank of Ghana, we have initiated a review of the ELA framework to make it more robust and less prone to abuse.”
The BoG has reiterated its committed to restoring trust and confidence in the banking system to promote a strong and resilient banking sector to support macro-economic growth.
By Nana Oye Ankrah