In view of the key role Special Deposit-Taking Institutions (SDI) play in extending access to financial services to small households and businesses, the Bank of Ghana has announced a new set of additional measures to further provide economic relief and increase credit to the key sectors of the economy.
The first of the measures announced includes the activation of the section 46A of the Bank of Ghana Act 2002 (Act 612) as amended, which allows for the provision of liquidity support to savings and loans and finance house companies facing temporary liquidity challenges.
However, the Bank has warned that the eligibility for this facility and the terms and conditions upon which it will be granted will be based strictly on the provisions of section 46A and BoG’s updated liquidity support policy framework.
Further to this, the Bank will strengthen the capacity of the ARB Apex Bank to provide liquidity support for rural and community banks facing temporary liquidity challenges in line with a framework to be agreed, whereas, Microfinance companies who meet eligibility criteria agreed will also qualify for this support from ARB Apex Bank.
The central bank has also extended the deadline for SDIs (MFIs and RCBs) to meet new capital requirements to December 2021. This is expected to provide temporary relief to SDIs, given current economic conditions.
The primary reserve ratio for savings and loans companies, finance house companies, and rural and community banks of eight percent has been reduced to six percent, and the 10 percent primary reserve ratio for micro finance companies to 8 percent.
All the measures according to the Bank are designed to release liquidity to the SDI sector, in order to enable them support their customers and ensure that the MSME sector and low-income households do not lose access to critical financial services in these uncertain times.
The Bank will further provide guidance to banks and SDIs on the accounting treatment of loan restructuring, classifications, provisioning, and expected credit losses, and prudential assessments of credit risk and capital ratios.
“Such guidance should help banks and SDIs make quicker decisions on customers’ requests for loan restructuring. BOG expects fair and equitable treatment of all customers of banks and SDIs at all times, and especially at this time,” the statement said.
The Bank also said it will strictly monitor business conduct rules for banks and SDIs in their dealings with customers, particularly in relation to transparency and fairness in revisions to loan terms and conditions, fee charges, and related issues.