Parliament has passed the Banks and Special Deposit Taking Institutions Bill.
The law, among others is to amend and consolidate the laws relating to deposit taking and to regulate institutions which carry out deposit taking business.
It also re-emphasizes the authority of the Bank of Ghana as the only entity responsible for the granting of licenses to enable deposit taking business in the country.
A report by the Finance Committee of Parliament on the Bill indicated that the law will apply to all banks, specialized deposit-taking institutions, financial holding companies, and affiliates of banks, specialized taking institutions and financial holding companies.
It however indicated that credit unions which are subject to licensing and supervision under the Non-Bank Financial Institutions Act, 2008 (Act 774) will not be affected.
According to the Finance Ministry, the Bill is in line with the vision of government’s financial sector reform policies which seek to make the financial sector of the country the preferred source of finance for domestic companies, promote efficient savings mobilization, enhance the competiveness of the country’s financial institutions, ensure a stronger and user-friendly regulatory regime, as well as achieving a deepened and a diversified domestic financial sector.
The Ministry also maintains that the enactment of the Act will also benchmark the legal and regulatory framework set out in the Bill with international principles and standard practices recognized by leading international financial standard setters including the Basel Committee of Banking Supervisors.
Bridge gaps in regulating banks’ solvency
The Ministry further contends that there are currently distinctive gaps in the frameworks for bank resolution or insolvency and the regulatory and supervisory oversight of the financial system which undermine the capacity of the Bank of Ghana to deal with potential crisis.
Among the lapses cited are that conglomerates of some banks in the country’s financial sector have been identified to have subsidiary security firms, industrial and insurance companies.
It therefore posits that since banks are not adequately supervised on a consolidated basis, it was possible that related intra party lending leak out unnoticed and the potential risks resulting from the inter-linkages may lead to systematic effect.
Consumer protection
Under the new law, the role of the Bank of Ghana indicated under the Banking Act,2004 (Act 673) has been expanded under the Bill for purposes of clarity, consumer protection and an increase in the supervisory powers of the Bank of Ghana.
Thus the Bank of Ghana has the sole responsibility to license banks and specialized deposit-taking institutions to grant approval to foreign banks with respect to the establishment of representative offices, and to register financial holding companies.
–
By: Pius Amihere Eduku/citibusinessnews.com/Ghana
