As president Akufo-Addo prepares to form a committee to look into a petition presented by the Ghana Association Indigenous Banks, some observers have warned that Ghana’s banking sector risks facing serious challenges if attempts are made to extend the deadline of the capital requirement.
According to them, the governor of the Bank of Ghana has a perfect opportunity to sanitize the banking sector with the 400 million cedis capital requirement announced by the central bank.
The Association of Indigenous Banks have petitioned the president to extend the deadline for meeting the capital requirement from 2018 to 2022.
But speaking to Citi Business News, the Head of Economics Department at the University of Ghana, Professor Peter Quartey was of the view that banks that cannot meet the requirement must become savings and loans companies.
“I am told that for some of them, their capital base is so low. Even the current 120 million cedis they have not met it. Some of them should rather be a Savings and Loans company or a microfinance company,” he said.
Urging the president not to extend the deadline, Prof. Quartey warned that the presidency could be setting a bad example that may come back to hurt the entire banking sector in the future.
“If you don’t stop it, and continue to allow them in begging the president, we will have a situation where everyday a bank may collapse by the time we wake up in the morning”, he said, adding that “banking is a serious business, if you don’t have the capital base don’t do it”.
He explained that the ordinary person is the ultimate loser when banks collapse since the central bank cannot look on but must step in to safeguard and protect depositors’ funds.
“When they collapse they impose a heavy payment burden on the tax payer. I don’t think we should be encouraging people to make money at our back while we break our back to make money to earn a living”
By: Lawrence Segbefia/citibusinessnews.com/Ghana