Governor of the Bank of Ghana, Dr. Ernest Addison has assured that the increased minimum capital requirement will result in reducing the lending rates by banks.
Dr. Addison argues that the requirements will create stronger banks which will lead to bigger banks and lower unit cost.
“Lending rates are still high but the explanations are the high non-performing loans. We have to accept that banking is a very expensive business. The banks have to pay rent, they have to hire labour, they have to use software, technology, so economy of scale matters in trying to bring unit cost associated with banking down” he said.
The BoG has increased the minimum capital requirement from 120 to 400million Ghana Cedis.
Addressing a gathering at a post-budget symposium, the Governor, Dr. Addison said the central bank is putting in efforts to reduce lending rates for businesses.
“This is one of the reasons why we are trying to encourage consolidation in the sector with a new higher minimum capital requirement which will lead to bigger banks and lower unit cost and hopefully see that comes through in terms of its impact on the lending rate” he added.
The commercial banks have December 2018 to meet the new minimum capital requirement.
By: Jessica Ayorkor Aryee/citibusinessnews.com