Panelists Call For Soft Regulatory Conditions For Local Banks

– Maiden XYZ Business Forum:


Panelists at the maiden XYZ Business Forum have called for comprehensive regulatory policies that would ensure the needed expertise and flexible conditions for indigenous banks to survive in the industry.

The banking sector, they said, is a complex system that needed both capital and transparent regulatory conditions to enable the investors, as well as management, to operate with low risk.

The panelists included Hon. Isaac Adongo, Member of Parliament  for Bolga Central; Dr. Lord Mensah, a financial expert, and Mr. Kwesi Pratt, Jnr., a senior journalists and social commentator.

Taking their turns to analyse the banking system in the country on the theme, “Enhancing the Competitiveness of Indigenous Banks,” the trio expressed the need for the central bank, better known as Bank of Ghana (BoG), to review some of its regulatory policies to push the indigenous banks up.

Hon. Adongo, who is also a member of Finance Committee of Parliament, stated that the weak and unrevised regulatory system by the BoG has either directly or indirectly contributed to the collapse of most indigenous banks.

He pointed out that, in other jurisdictions, the roles of key shareholders who set up the bank and the management or board members and expertise requirement are clearly stated, but it is on the contrary in Ghana.

“We are in a country where people who came together to set up the bank, turned themselves as chairmanship and board members. These shareholders’ debt accounts daily even beyond the money on their shares.”

“One other thing is that the BoG does not state clearly in its  regulatory policy the expertise requirement for persons holding certain positions in bank operation, because in other places, it is not so.”

“If you do not have certain experts or knowledge in certain fields you could not simply be appointed to that position when you have no knowledge in that, but that is what is happening in our country and causing many indigenous banks to perform poorly,” Mr. Adongo intimated.

Dr. Lord Mensah, on his part, said the local banking system needed a push up, but the laws must be transparent and soft conditions to enable them to operate to reduce risk of collapse.

He expressed disagreement for bailout for banks risking collapsing if such banks are not directly beneficial to the nation or the citizenry.

Dr. Mensah argued that, the bailout should be given to local banks whose operations remain significant to the people and their interests go to the state rather than the shareholders.

Making his views, Mr. Pratt, Jnr., said he finds it difficult to agree with the BoG policy to bailout indigenous banks whose managers live lavish lifestyles at the expense of the bank’s customers.

He said, in such a situation, the chain of social justice of fairness, justice and equity is broken where a poor taxpayer’s money taken by the Ghana Commercial Bank is paid to a private businessman who voluntarily opened a bank and managed to mismanage it.

The senior journalist, who is hard on issues of national interest, added that though he was not entirely against bailout for indigenous banks, he wondered why the private sector, which is often described as the engine of growth, is now rushing to the public sector for a bailout.

The panelists both expressed interest in the need for the banking sector to be properly regulated to ensure that certain mismanagement sources are blocked to improve both the micro and macro financial systems.




Source: Felix Engsalige Nyaaba


The Republic News Online

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