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22.08.2017 Business & Finance

Minimal Capital For Banks Should Be Pegged At GHC600 Million

By Kwadwo Owusu-Ansah, Space FM, Sunyani
Minimal Capital For Banks Should Be Pegged At GHC600 Million
22.08.2017 LISTEN

An Economist in Sunyani and member of the Institute of Certified Chartered Economists of Ghana, (ICEG), Mr. Enoch Okonah, has suggested to government to increase the minimum capital requirement for Commercial Banks from the current GHc120 million to GHc 600 million.

This according to him would build stronger, stable banks to develop the economy.

The Bank of Ghana implemented a two-fold increment from GHC60 million in 2009 to GHC120 million in 2013 for new entrants, and the number of banks actually increased from 28 to 36 currently.

Speaking on Space FM’s Morning Flight 877 hosted by Dickson Smith, Mr. Okonah added that raising the capital requirement would also ensure fewer banks with bigger bases to execute huge projects for the country. Mr. Okonah’s suggestion comes on the bank of the collapse of Capital and UT Banks after poor financial performs for years.

A statement issued by the Central Bank said: “The Bank of Ghana has approved a Purchase and Assumption transaction with GCB Bank Limited that transfers all deposits and selected assets of UT Bank Ltd and Capital Bank Ltd to GCB Bank Ltd.

The Bank of Ghana has revoked the licenses of UT Bank Ltd and Capital Bank Ltd. This action has become necessary due to severe impalement of their capital.

The remaining assets and liabilities will be realised and settled respectively through a receivership process to be undertaken by Messers Vish Ashiagbor and Eric Nana Nipah of PricewaterhouseCoopers. There are 36 banks in the country with 26 million people, a situation industry players argue is not healthy as most of the banks do not have enough capital.

Dr Anthony Akoto Osei, Minister of Monitoring and Evaluation has also argued that Ghana has too many commercial banks. According to him, the number of commercial banks in Ghana vis-à-vis its 26 million population, is unhealthy for the financial sector, therefore the smaller banks must consider consolidation.

Mr. Okonah urged smaller banks to consider mergers to remain in business since the crusade for the downsizing commercial would continue till the system is cleaned.

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