The Dean of the College of Accounting and Finance, UPSA and Govt Director of the Institute of Financial Analysis and Coverage (IERPP), Professor Isaac Boadi, says whereas Ghana’s banking sector has made commendable strides in stability and transparency, the Financial institution of Ghana (BoG) should tread rigorously with its newest regulatory reforms to keep away from unintended penalties that might undermine progress.
“Laws should safeguard stability, not choke progress,” Prof. Boadi cautioned, urging the central financial institution to undertake a phased, data-driven method to reform implementation.
The BoG’s new regulatory framework touches on vital features of banking operations, from reserve necessities to digital lending and crypto oversight. Whereas many measures present promise, IERPP’s evaluation highlights areas that warrant nearer consideration and adjustment.
The primary new measure to be launched, efficient June 5, 2025, is the Twin-Foreign money Reserve Requirement. Banks can be required to carry reserves in each home and foreign exchange. Whereas this will likely assist scale back foreign exchange volatility and enhance central financial institution management, it may additionally prohibit credit score if reserve thresholds are set too excessive.
IERPP recommends a gradual rollout to forestall liquidity constraints.
The second new measure is Cap on Cross-Foreign money Card Transaction Charges (2%). That is merely to restrict charges on worldwide card transactions to 2 per cent. It will scale back prices for customers however might erode financial institution revenues. IERPP recommends a tiered charge system may present flexibility whereas defending shoppers. In 2024, cross-border transactions reached $1.8 billion, underscoring the measure’s potential impression.
The following initiative by BOG is the Necessary Disclosure of Issuer Charges. This initiative will drive banks to indicate all charges upfront throughout transactions. Enhancing transparency is a welcome transfer. Nevertheless, standardising how charges are offered is essential to keep away from confusion and extra compliance burdens, IERPP recommends
The BoG introduces a No Curiosity on Inactive Credit score Accounts. It will prohibit curiosity on dormant credit score accounts. This initiative protects shoppers however might immediate banks to limit credit score entry. A transparent definition of “inactive” (e.g., six months of no exercise) is required, IERPP recommends.
Digital Lending Tips to be by August 2025 is one other initiative by BoG. As Ghana’s digital lending market grew by 40 per cent in 2024, laws are important. However overregulation may stunt innovation. Stakeholder consultations are key to putting the fitting steadiness, IERPP tells BoG.
Moreover, the BoG introduces NPL Ratio Cap at 10 per cent by December 2026. What this initiative means is that Banks should keep NPLs beneath 10 per cent of complete loans. With Ghana’s present NPL ratio at 14.5 per cent, IERPP warns that implementing a sudden cap may drive banks into aggressive write-offs, lowering credit score availability. A phased method with performance-based incentives is beneficial.
Native Governance for International-Owned Banks is the seventh initiative by BoG. This initiative states that International banks should meet native governance requirements (e.g., impartial boards). Requiring native impartial boards may enhance accountability however might elevate prices. Since overseas banks maintain 40 per cent of banking belongings, overly inflexible insurance policies may deter funding, IERPP cautions BoG.
Moreover, BoG informs banks to Assessment of Pricing Fashions. This initiative requires banks to simplify and justify charges. Eliminating opaque expenses builds belief. Nevertheless, short-term financial institution revenues might dip. Common regulatory audits can be important for compliance, IERPP warns BoG.
The 9 initiative focuses on Public Itemizing of Blacklisted Debtors. This initiative forces the Banks to necessary publish the record of defaulters publicly. Whereas this promotes self-discipline, privateness safeguards are important to forestall authorized and reputational dangers, IERPP warns BoG to tread cautiously.
Lastly, the BoG tells Banks to Strengthened AML/CFT for Crypto. This initiative seeks tighter anti-money laundering guidelines for crypto transactions. This reduces illicit finance dangers however may hinder crypto progress. IERPP urges a balanced regulatory posture that helps fintech innovation whereas making certain compliance.
IERPP recognises the BoG’s dedication to monetary integrity and resilience. Nevertheless, reforms have to be executed with precision and session to take care of momentum with out triggering counterproductive results.
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DISCLAIMER: The Views, Feedback, Opinions, Contributions and Statements made by Readers and Contributors on this platform don’t essentially signify the views or coverage of Multimedia Group Restricted.
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