The Bank of Ghana assured stakeholders here on Tuesday it will act to sustain a smooth development of the banking industry.
Addressing stakeholders, Deputy Governor of the central Bank, Elsie Addo Awadzi said authorities will operationalize the deposit protection scheme to protect depositors funds within the industry.
The central bank has set a December 2018 deadline for commercial banks to raise their minimum stated capitals to 400 million Ghana cedis or about 90 million U.S. dollars, from the existing 120 million cedis or 27 million dollars.
Awadzi argued that the new capital floor will help make banks stronger and resilient, and position them to better support the Ghanaian economy, urging them to endeavor to comply by the requirements by the deadline.
“While the outlook is positive, there are a few pockets of vulnerability in the sector which we continue to monitor on an active basis to ensure that the banking sector continues to be safe and sound and that depositors’ funds remain safe,” Awadzi stated.
The banking sector forms 85 percent of the entire financial system, making economic activity largely dependent on bank financing more than on capital market financing and Bank of Ghana is statutorily mandated to promote the stability of the financial system, and to protect the interests of depositors.
“This is a responsibility the management of the Bank of Ghana takes very seriously. A robust banking sector is therefore, critical to the stability of the entire financial system and economic growth ultimately,” the deputy governor maintained.
The industry’s average Capital Adequacy Ratio (CAR) improved to 19.2 percent in February 2018, reflecting efforts by banks to recapitalize. The Non-Performing Loans (NPLs) ratio remained unchanged at 21.6 percent since December 2017 as banks continued to clean up their balance sheets.
The central bank closed down two commercial banks, UT Bank and Capital Bank last year while appointing an official administrator for uniBank, this year as part of efforts to sanitize the banking sector.
She said the bank will continue to strengthen its Banking Supervision Department through capacity building and improved supervisory processes, in order to identify early warning signs of bank distress and to take prompt corrective action to address such risks.
“In light of this, the culture of regulatory forbearance that once prevailed will not be countenanced,” the deputy governor warned. Enditem