Capital requirements for commercial banks to increase

quist

August 26, 2015 2:36 PM

Banks in the country are taking more risks than before, which is a good thing. But they are required to have the capital base commensurate with the risks they are taking.

Commercial Banks operating in the country may have to increase their capital base as the Central Bank discloses that it will increased its capital requirements for commercial banks operating in the country.

The Bank of Ghana Increased capital requirements for commercial banks operating in the country from GHC60,000 to 120, 000 in 2015. But the current revelation by the Bank of Ghana means commercial banks will have to come up with more capital.

Addressing the press at the launch of the Price Waterouse Coopers 2015 Banking Survey on Wednesday, Head of Banking Supervision at the Bank of Ghana, Franklin Benye says, the requirement is due to the need for capital requirements commensurate with the risk burdens of banks.

According to him banks in the country are taking on more risks than before, which is a good thing. But they are required to have the capital base commensurate with the risks they are taking.

" We are still operating the Basel Requirement 1. Other countries are operating Basels 2 , 3 and even 4. We think its time to transition from Basel 1 to Basel 2."

The Basel II is an international business standard that requires financial institutions to maintain enough cash reserves to cover risks incurred by operations. The Basel accords are a series of recommendations on banking laws and regulations issued by the Basel Committee on Banking Supervision (BSBS)

Mr. Franklin Benye added that, as banks take more risks in investments they must raise the required capital to back liability to customers.

Meanwhile, Managing Director of Stanbic Bank, Alhassan Andani has described the Central Bank's decision as reasonable. " Of course, the Basel Standards are in the right direction, and they are fair. It is based on the individual risk assessments of banks. So banks who take on just basic risk ventures will haveless capital requirements than those who take higher risk burdens."

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