The Bank of Ghana (BoG) has increased the capital requirement of commercial banks in the country from 60 million Ghana cedis to 120 million Ghana cedis to strengthen them against risks.
By this, commercial banks in the country would be expected to raise their capital assets to a minimum worth of 120 million Ghana cedis as an insurance in times of challenges.
According to sources at the Central Bank, the move has largely been welcomed by some major banks whose capital requirement already exceed the minimum level set by the BoG.
“It was just a matter of time because all the banks are aware that the BoG will soon increase it, especially after it was increased for new entrants from GHS60million to GHS 120 million some years back”, a source told the Business Day.
The BoG is said to have settled on the 100 percent increase after a careful examination of current economic developments in the country.
“It is a more sensible approach to encourage banks to put in capital to march the extent of risk they want to take in the economy”, Managing Director of Stanbic Bank, Alhassan Andani is reported to have said earlier this year.
Already, the Head of Banking Supervision at the BoG, Mr. Franklin Belnye is reported to have confirmed the Central Bank’s engagement with stakeholders at this year’s Ghana Banking Survey held in Accra.
He was optimistic that the BoG’s new banking laws being put together will further improve regulations and Supervision in the sector.
The new banking regulation which is currently before parliament awaiting approval, will among other things include new measures to protect depositors’ funds, and enhance the Bank of Ghana’s independence.
Prevailing capital requirement for rural banks
In July this year, the BoG increased the minimum paid-up capital requirement for obtaining a Tier 2 and Tier 3 Microfinance Institution License to 2 million cedis from 1 million cedis.
This formed part of a total review of the minimum paid-up capital of rural banks and microfinance institutions.
This was after the Central Bank increased the minimum capital for micro finance institutions by 100%, from 500 thousand to 1 million cedis.
Capital requirement for Microfinance institutions
According to the BoG , Microfinance Institutions which have been granted provisional approval by the Bank of Ghana, shall comply with a minimum paid-up capital requirement of GH¢500,000 and submit a credible capital plan to raise the minimum paid-up capital to GH¢2,000,000 .
