13th ANNUAL GHANA ASSOCIATION OF BANKERS WORKING LUNCHEON HELD

The 13th Annual Working Luncheon of the Ghana Association of Bankers [GAB] has taken place in Accra with an assurance by the Bank of Ghana [BOG] that it stands ready to implement sound monetary policies as well as take appropriate measures aimed at consolidating macroeconomic stability.

Delivering his keynote address, Mr. Millison Narh, 1st Deputy Governor of the BOG disclosed that they have taken a major step to enhance transparency in the setting of lending rates in the industry.

The new rate model which became operational in July 2013, seeks to ensure transparency and uniformity within the banking industry in the country.

According to him, as per the directive, banks have fully complied with the new framework and that there are positive indications that on the average, base rates have declined by about 3 percent in the banking industry. This new initiative, together with the credit bureau system and the collateral registry should help improve the environment for lending and further help lower Non Performing Loans [NPLs] in the banking industry.

The Senior Deputy Governor also touched on capital requirements, a matter which he describes as sensitive to both the industry players and the Central Bank. Developments in the macro-economic front have necessitated the need for the Bank of Ghana to review the minimum capital requirements for new industry entrants.

To this effect, he announced that the minimum paid-capital for major banks have been revised from GH¢60 million to GH¢120.0 million while that of Non-Bank Financial Institutions increases from GH¢7.0 million to GH¢15.0 million. That of the rural banks have been upped to GH¢300,000.

''These increases are necessary in order to provide our institutions with the muscle to undertake big-ticket deals to support the growth of the private sector and to further serve as a capital cushion for absorbing unexpected losses that may arise in the normal course of business'' Mr. Narh indicated.

He used the opportunity to advise the industry players, particularly the banks, to properly align their risk appetite to their capital levels.

This he said is important because any misalignment between risk and capital could threaten the solvency of the institution and unduly put shareholders investments at risk adding that subsequent to these capital enhancements, they have initiated action towards gazetting the increases as required by law.

To equip our tool box with the necessary tools needed to identify and manage problem of banks, the Bank of Ghana has developed a Supervisory Intervention Guide which seeks to provide a consistent and transparent framework for intervening in the operations of regulated deposit-taking Financial Institutions with the view to protecting the interest of depositors and shareholders, he reveals.

Looking ahead, Mr. Milison Narh noted that the central bank is optimistic inflation will edge closer within the target band by 2013 ending as inflationary pressures decline in the quarters ahead.