BoG to amend guidelines for commercial banks on loans

The Central Bank has begun moves to amend its risks guidelines for commercial banks.

This means commercial banks will soon have new guidelines on the quantum of loans they can advance to their clients.

It forms part of measures to reduce the high non-performing loans in the banking sector.

Governor of the Central Bank made this known in a speech read on his behalf by Grace Akrofi at the Annual General Meeting of the Ghana Association of Savings and Loans Companies in Accra.

She added that “other guidelines and directives have also been finalized and ready to be issued for the industry” and they are guidelines on mergers, acquisitions, owner and control, guidelines for financial holdings and outsourcing guidelines among others.

The BOG, she asserted remains committed to ensuring that financial institutions improve their governance practices, internal control and risk management, encouraging Boards and senior managements of financial institutions to practice sound corporate governance practices and comply with the provisions of the corporate governance directives to increase productivity in the sector.

The Central Bank in April said apart from effort to ensure a smooth transition into the new capital requirement of GH¢400 million, commercial banks will be charged to significantly reduce Non-Performing loans.

It is believed the aim of raising the capital requirement will not yield the needed result if the monies are invested in unproductive ventures.

Speaking at Fidelity Bank’s Customers Appreciation Dinner, the Second Deputy Governor of the Bank of Ghana (BoG) Elsie Awadzi said the latest move including the hike on the minimum capital requirement will lead to the building of a robust banking sector.

“The increased minimum capital requirement of GH¢400 million as well as the move to Basel II and III are all part of the Bank of Ghana’s effort to strengthen the banking sector,” she said.

Acknowledging that a lot remains to be done on the regulatory front, she stated that “in addition to ensuring a smooth transition to the new capital requirement by December 2018, the Bank of Ghana will also ensure that the banks bring down their non-performing loan level.”

The Central Bank, she further noted, will demand that banks improve their governance and risk management systems including cyber and information security related risks.