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29 September 2016

Minimum capital requirement for banks to hit GHC500m

nashiru-issahakuThe minimum capital requirement for commercial banks in the country could be increased to Gh¢500 million from next year.

This is what JOY BUSINESS has picked up from persons close to reviewing the capital requirement.

A technical committee is already working to determine the appropriate capital levels and the actual time that all the Universal banks in the country should recapitalize to this new proposed levels.

The announcement could be made this year, while implementation could start from 2017.

If the Bank of Ghana goes ahead this review, this will increase the minimum capital requirement from the current Gh¢120 million to GH¢500 million.

Governor of the Bank of Ghana (BoG) , Abdul Nashiru Issahaku at a recent
engagement with Managing Directors of Commercial banks indicated that the current developments in the economy make a strong case for the capital to be increased.

“The Bank of Ghana is of the conviction that the time to inject more capital is now, to enable banks to become strong and resilient to take on big ticket deals both locally and internationally,” he said.

JOY BUSINESS understands that the decision to increase the capital has also been influenced the increasing number of applications from some financial institutions to set up a Commercial Bank in the country.

The Central Bank is also worried about the increasing request from existing commercial banks to be given a waiver to grant, loans beyond a fraction of their minimum capital requirement.

Some are of the firm convinced that, the about GH¢300 million jump in the capital to GH¢500 million could reduce the current number of 32 Universal banks in the operation.

Others think that looking at what happened in 2007, where most commercial bank’s still managed to meet the new capital requirement, the jump will not result in any significant drop in commercial banks operating in the country.

In a related development, Second Deputy Governor of BoG, Millison Narh at a recent engagement with State Owned Enterprises, stated that Commercial banks will be given the enough time to recapitalise, if the regulator settles on the new minimum capital requirement levels.

 

Source: Myjoyonline.com

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