Here's why Bank of Ghana revised licensing procedures for banks

The Bank of Ghana (BoG) has disclosed that it has renewed its structures and procedures for licensing with more thorough due diligence and capital verification processes.

Dr Ernest Addison, Bank of Ghana Governor

This follows the clean-up exercise it carried out which resulted in the collapse of some nine domestic commercial banks in the country.

The Governor of the BoG, Dr Ernest Addison made the revelation while addressing participants at the New Year School and Conference organised by the University of Ghana.

According to him, the central bank has introduced an enhanced process for making new rules which involve a more structured stakeholder consultation for universal banks in the country.

He emphasised that the recent launch of the Ghana Deposit Protection Scheme is another feature of a more resilient financial safety net for Ghana.


“The Ghana Deposit Protection Corporation (GDPC) is now fully operational, with all banks, savings, and loans companies, finance houses, microfinance companies, and rural and community banks, currently admitted as members of the scheme,” he said.

Adding that “To some extent, the recovery efforts have been hampered by frivolous legal challenges mounted by some complicit persons intending to frustrate the Receivers.

“These schemes ought not to be countenanced by the courts, as they do not inure to the benefit of the real victims of these multiple failures, the taxpayers, that have had to pay for the cost of these failures, and must not be left holding the raw end of the stick in the circumstances,” Dr Addison noted.

Currently, details of suspicious transactions, misappropriation of funds, false accounting and misreporting, according to the BoG governor, have been referred to the criminal investigative authorities and the Attorney General.

He said, “We expect that criminal behaviour, once established, will be prosecuted and the perpetrators brought to book. We will continue to urge the law enforcement agencies and criminal investigative authorities to expedite their investigations into several suspicious transactions brought to their attention by the Receivers to facilitate prosecutions that may be necessary to ensure that justice is served.”


He reiterated that the central bank has undertaken a comprehensive and detailed internal investigation into possible complicity of its staff, adding that the management has sent clear signals to the staff about the need to ensure discipline and professionalism in line with the bank’s new Code of Conduct that was launched in May 2019 alongside the establishment of the Ethics and Internal Investigations Office.

He noted that the revocation of the 420 licences, in total, was a painful but necessary exercise to sanitise the financial system while creating the environment for stronger and well-run institutions to thrive and play their expected role of supporting businesses of all sizes and households.

“One thing was clear and that is: banks were set up overnight by little or no capital and by persons with little or no experience in running successful banks. What is more, all the resolved banks were managed or controlled by shareholders with complete disregard for prudential norms and best practices in corporate governance and the management of banks,” Dr Addison added.

“It became clear that these institutions were set up to use depositors’ funds to finance other businesses of shareholders or other related or connected companies. In the process, oligarchies were formed involving various groups of companies under the control of common shareholding by a few politically-connected persons whose relationship with political authorities gave them a false sense of protection from the law and dared to do the unthinkable at the expense of depositors whose funds were used to keep these groups going,” he concluded.


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