The coming into force of the new rules by Bank of Ghana on the operation of banks has helped salvage the fortunes of the banking sector , a top banking executive has said.
Speaking to the media after addressing shareholders and traders at the Ghana Stock Exchange (GSE) on Thursday, Philip Owiredu, Executive Director of CAL Bank noted that the increase in the Capital Adequacy Ratio for the sector to 13 percent from the previous 10 percent was a positive move.
As part of its reforms, the central bank introduced the Basel II measures, a set of international banking regulations that expanded rules for minimum capital requirements established under Basel I.
“The implementation of the Basel II and III regulations are a step in the right direction that will enhance corporate governance as well as protect the financial sector,” the top banking executive added.
The implementation of these rules, Owiredu was confident will help local banks to grow.
As to whether the human resource pool in the local banking sector was adequately prepared for full implementation of the reforms, Owiredu expressed great confidence in their ability.
The Bank of Ghana reforms which saw the collapse of about nine local banks between 2017 and 2018 was occasioned by high Non-Performing Loans (NPLs) in the banking sector, caused primarily by loan defaults by both the public and private sector.
Earlier government had passed the Energy Sector Levy Act (ESLA) in December 2015 to set up the energy sector levy to be used to clear debts of more than two billion dollars that state power utilities owed the banking sector.
The central bank however discovered that some of the banks had also flouted prudential norms in granting credit to some of their customers, resulting in the ruins the sector suffered.
To protect depositors’ funds some of the collapsed banks were merged into one entity called the Consolidated Bank of Ghana (CBG), while some were taken over by the largest local bank, GCB. Enditem