The Bank of Ghana has issued a directive on license and capital requirements for Development Finance Institutions (DFI). Section 6 of the Development Finance Institutions Act, 2020 (Act 1032) forms the basis of the directive. The Bank’s Secretary, Ms. Sandra Thompson signed a public notice containing the details of this directive.
Eligibility
The BOG specified that a person who seeks to carry on a Development Finance Business (DFB) shall be a body corporate formed under the Companies. However, the Bank warned that no person shall carry on a DFB as defined under the Act unless it has licensed that person.
Application for License
The Bank of Ghana also outlined the application process for persons or corporate bodies who seek to undertake DFB in the country. The Central Bank said a person who seeks to carry on a DFB shall apply in writing to the Bank of Ghana. This must, however, be in line with the relevant provisions of the DFI’s Act, 2020 (Act 1032).
Furthermore, the BOG specified that the application for a license shall be accompanied by certain relevant documents. The Bank also require the applicant to provide the official name of the institution that needs the license . BOG also required the applicant’s authorized business as registered at the Companies Registry . The Bank of Ghana also demands a list of all shareholders and ultimate beneficial owners of the applicant.
Other processes
Furthermore, applicants are to provide the particulars of the proposed directors and key management personnel concerned with the management of the applicant.
“An application for a license shall indicate clearly the type of development finance license that is being applied for. The Bank of Ghana may require that information supplied to the Bank be verified, certified. Or otherwise authenticated in the manner that the Bank of Ghana may determine”.
Bank of Ghana
Moreover, the BOG stated that it will inform the the applicant that it has received the application. The Bank will do this within ten days. Also, BOG will communicate its decision in writing to the applicant within six months after the receipt of an application. “The Bank of Ghana shall within three (3) months inform the applicant in writing of the decision of the Bank of Ghana”.
Minimum Paid-Up Capital and Application Processing Fees
According to the BOG, the initial minimum paid-up capital is GH¢800,000,000, GH¢600,000,000, and GH¢300,000,000 for Wholesale, Retail, and Guarantee DFI license respectively.
BOG pointed out that the initial minimum paid-up capital will depend on the Development Finance (DF) activities undertaken by an intuition. This is applicable to institutions that combine all the 3 activities. That is, Wholesale, Retail, and Guarantee. Moreover, BOG requires an institution that undertakes all the three activities to pay GH¢1,200,000, 000 as an initial minimum paid-up capital.
Also, BOG stated that institutions combining Wholesale and Retail DF will require an initial minimum paid-up capital of GH¢1,000,000,000. Whilst those combing Wholesale and Guarantee DF will require GH¢1,000,000,000. Meanwhile, the Retail and Guarantee DFI will require an initial minimum paid-up capital of GH¢800,000,000.
The BOG notes that, not less than 60% of the required capitalization shall be brought into Ghana in convertible currency. This is in the case of full or majority foreign ownership of the DFI. The BOG expects an application processing fee of GH¢20,000 through Payment Order with the BOG as the Payee.
Provisional Approval
“The Bank of Ghana shall not issue a license to an applicant unless the Bank of Ghana is satisfied that the feasibility report submitted by the applicant is based on sound analysis and prudent, reasonable assumptions”.
Bank of Ghana
Nevertheless, the BOG indicated that it may, where necessary, restrict the activities that a DFI is permitted to undertake. The bank will however, do this in accordance with the Act 1032. “A license issued under the Development Finance Institutions Act, 2020 (Act1032), shall be subject to conditions that the Bank of Ghana may impose”.
