The Ghana Association of Banks (GAB) Governing Council has engaged the newly appointed Governor of the Bank of Ghana (BoG) in a high-level meeting to address critical challenges facing the country’s banking sector.
The meeting, which was marked by congratulatory remarks and calls for stronger collaboration, covered key topics such as cash reserve ratio (CRR) reforms, correspondent banking relationships, fintech regulation, and FX liquidity.
One of the primary concerns raised was the current Cash Reserve Ratio (CRR), which banks argued was restricting financial intermediation and increasing operational costs.
The BoG Governor acknowledged the impact of the CRR and assured banks that a review was under consideration. However, he emphasized that any adjustments would be phased to prevent economic instability. He welcomed industry input on mitigating risks associated with liquidity releases, highlighting that even the International Monetary Fund (IMF) supported a review of the policy.
GAB members also expressed concerns about Ghana’s credit rating challenges, which have affected correspondent banking relationships. Banks called for an upward revision of Nostro and affiliate exposure limits to ease constraints on international transactions. The Governor acknowledged these challenges and assured stakeholders of his commitment to assessing and improving the situation.
With the rise of fintechs and Money Transfer Operators (MTOs) in the remittance market, banks raised concerns over regulatory gaps that could lead to foreign exchange (FX) losses for Ghana.
The Governor indicated that the BoG is already reviewing MTO operations and urged banks to collaborate in streamlining the sector for greater transparency and stability.
Another key issue was the expiration of the special dispensation on restructured Cocoa Bonds under the Domestic Debt Exchange Programme (DDEP) in April 2025. Banks noted that COCOBOD’s financial position and market illiquidity made it difficult to sell down these bonds. The Governor responded positively, expressing his willingness to extend the dispensation to support affected banks.
GAB members called for an end to the mandatory sale of FX proceeds from mining and oil companies to the BoG, arguing that allowing these funds to flow through the banking system would improve FX price discovery and deepen liquidity. The Governor acknowledged the importance of FX market efficiency and expressed openness to further discussions on the matter.
The Governor sought feedback on the effectiveness of the Ghana Incentive-Based Risk-Sharing System for Agricultural Lending (GIRSAL) in de-risking agricultural financing. Banks responded positively, supporting scaling up agricultural financing initiatives. The Governor reaffirmed his commitment to doubling agricultural lending and assisting GIRSAL in raising additional guarantee funds. He urged GAB to lead stakeholder engagements to enhance and de-risk agricultural value chains.
Banks raised concerns about rising Non-Performing Loans (NPLs), emphasizing the need for fiscal policy interventions to reduce inflation and interest rates. The Governor acknowledged the role of sound monetary and fiscal policies in stabilizing the banking sector and indicated that his administration would prioritize measures to address NPL growth.
The meeting also explored the possibility of revising Ghana’s universal banking license regime by introducing flexible capital requirements and a tiered banking system. The Governor mentioned that the integration of Islamic banking into the country’s financial system was under consideration as part of broader banking reforms.
The Governor emphasized the importance of settling transactions with major African trade partners in local currencies, rather than defaulting to the US dollar, which puts pressure on the cedi. He highlighted Nigeria and South Africa as key partners for local currency settlements and encouraged regional banks to facilitate intra-African trade.
The meeting concluded with remarks from bank executives and the BoG Governor, reaffirming their commitment to ongoing collaboration to address sectoral challenges. A group photograph was taken to mark the occasion, symbolizing a renewed partnership between the BoG and the banking sector.
This engagement signals a new era of cooperation aimed at ensuring Ghana’s banking sector remains resilient, competitive, and well-regulated in the face of evolving economic challenges.
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Source:
3news.com
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