Financial Crime World

Regulatory Crackdown on Ghanaian Banks: BoG Issues Directives to Address Deficiencies

Accra, Ghana - The Bank of Ghana (BoG) has issued a series of directives to regulated financial institutions in response to numerous enforcement issues and non-compliances with regulatory requirements.

Key Findings and Concerns

The report highlighted that some banks have failed to comply with submission of returns due to the BoG, primary reserve requirements, single obligor limits, and capital adequacy requirements. These deficiencies have led to concerns over financial stability and the safety and soundness of the banking system.

BoG Directives and Remedies

In response to these findings, the BoG has issued directives aimed at mitigating non-compliance and ensuring that banks operate in a safe and sound manner. The directives include:

  • Training programs for bank staff: to enhance their understanding of regulatory requirements
  • Enhanced monitoring and supervision of banks: to identify potential risks early on
  • Increased transparency and reporting requirements for banks: to improve financial disclosure and risk management
  • Stricter enforcement measures, including fines and penalties for non-compliance: to deter future non-compliance

Capital Adequacy Requirements

The BoG has also revised the minimum paid-up capital requirement for existing banks and new entrants from GH¢120 million to GH¢400 million. Existing banks have until December 31, 2023, to comply with this new requirement.

Bank Failure and Resolution Planning

In the event of a bank failure:

  • Management and directors may be required to assist with the smooth transition of assets and liabilities: to an acquirer
  • They are not personally liable for the failure unless found guilty of offenses under the Banks and Specialised Deposit-Taking Institutions Act

The BoG has also issued guidelines on capital restoration plans for undercapitalized banks, which must specify how the bank intends to restore its capital adequacy within 180 days.

Insolvency Proceedings

In the event of insolvency:

  • The BoG will revoke the bank’s license: and appoint a receiver to take over the assets and liabilities
  • The GDPC will be notified of the decision

Recent and Future Changes

The BoG is committed to monitoring and addressing changes in the financial system that may impact capital adequacy requirements. As such, guidelines are subject to change depending on risk and vulnerability assessments.

Conclusion

The BoG’s directives aim to strengthen the regulatory framework and ensure the stability of the banking system. Banks must comply with these requirements to maintain their licenses and avoid penalties. The move is expected to improve financial transparency, reduce risks, and enhance confidence in the Ghanaian banking sector.