The common occurrence of bank failures and collapse in Ghana cause a significant panic in the people and alter their saving behaviour. There have been quite too many collapses and liquidation of banks in Ghana. Banks serve as a place of safety in the handling of money by businessmen and women. Banks help to reduce some aspects of financial risks in the world of finance. A country with no or little trading in stocks and bonds, the banks serve as a place of safety. The merits of banks and their operations cannot be overlooked in the development of every economy.
However, the case of the financial sector is a source of worry for all stakeholders in the service industry which banking forms a part. Since 1992 to the date, there have been several experiences of bank collapse that continuously affect the culture of saving and investments. Meanwhile, savings and investments constitute the activities that help create wealth and money for the state and other businessmen and women. The constant problems within the sector are eroding the confidence and trust people have in those institutions. The banking industry has been expanded considerably to encompass mobile money transfers and other means of payments.
Evidence exist to illustrate the never-ending problems in the sector from the traditional banks through to savings and loans and mobile money transfers. The payment systems and platforms are losing their purpose due to the constant difficulties that their users encounter from time to time. The real cases involved DKM, Pyram, Eden, God is love, Mzpah, U.S Tilapiah, Noble Dream, Capital bank, UT bank and many others are instances that the banks failed to safeguard the money of their depositors and their safety roles were wanting. The ultimate losers often are the depositors who do not have any better cover until the promulgation of the depositors’ protection bill. Its passage into law cannot be underestimated as a hand of safety is extended in that form.
Safety in the industry is key and needs to be established firmly. The passing of that bill won’t be enough to make the bank a source of safety in keeping money. Enough safety cover through the expansion of the blanket by such an instrument is dearly cherished. The banking industry had gone through a lot of revolution and expanding the safety net of the customers or rather depositors is needed to be instituted by the Bank of Ghana and other regulators in the system.
The current regulatory requirement of the Central Bank for banks to increase their minimum capital is only a step to enhance the lending aspects of the banks. The financial intermediary functions of the banks are augmented by having a broadened capital base. Lending and executing many sets of transactions can be done through sizeable amount of capital.
The initiative of keeping a large amount as capital required to ensure safe operations should be carefully exercised such that the depositors will only suffer minimal losses in case of any eventuality. The bank should be viewed as the only safe place to keep people’s money and every effort that will practically help to achieve it should be pursued. The citizenry continue to lose confidence at the happening of every event of bank collapse.
The regulators should be firm in establishing safety precautions for the banks and their depositors to create a conducive environment for the exchange of money.