The Central Bank of Ghana (BoG) in a press release on 13^th March, 2023, disclosed its regulatory role in the financial intermediation industry.

According to BoG, its regulatory and supervisory activities is aimed at providing a transparent framework for entry and orderly exit of the Regulated Financial Institutions (RFIs), as well as assessing an on-going basis pertaining to the safety and soundness of the supervised institutions.

The promotion and maintenance of Financial Stability, as indicated by BoG, is facilitated through Micro and Macro-Prudential Supervision under certain supervisory structures of the Bank of Ghana. These structures are; Banking Supervision Department, Other Financial Institutions Supervision Department, Payment Systems Department, Fintech and Innovations Office and the Financial Stability Department.

BoG further communicated that its regulatory and supervisory function and requirements are aligned with international standards namely; the Basel Committee on Banking Supervision (BCBS) – the global standard setter for the prudential regulation of banks and the International Accounting Standards Board (IASB) – a global accounting standard setter.

“The BCBS issued the Basel Core Principles for Effective Banking Supervision (BCPs) as the global standard for establishing a sound foundation for the regulation, supervision, governance and risk management of banking systems as well as the Basel Capital Accord, which ensures that banks hold adequate capital commensurate with their risk profile and sets the global standard for the computation of capital adequacy ratio for international active banks.”
Bank of Ghana

Following the clean-up exercise on the banking industry that began in 2017, the Central Bank of Ghana rolled out a number of regulatory interventions in response to lessons learnt from the exercise.

These interventions, as outlined by BoG included; strengthening of minimum paid-up capital requirement, Capital Requirement Directive, Risk Management, Corporate Governance, Fit and Proper Persons Directive, Cyber Security, Eligible Collaterals Directives, Anti-money laundering and Counter-terrorist financing (AML/CFT).

Commenting on Risk management, the Central Bank of Ghana pointed out that it has promoted strong risk management practices in banks (including cyber and information security related risks) through the issuance of the Risk Management Directive to Regulated Financial Institutions (RFIs).

“This intervention was aimed at instituting a Risk Governance framework in the banking industry to enable the regulated institutions effectively manage all material risks inherent in the deposit-taking business whilst serving as a prelude to the implementation of Pillar 2 of Basel II/ III Capital Framework.”
Bank of Ghana

doc — Dr. Ernest Addison – the Governor of the Central Bank of Ghana

BoG Outlines Risk-Based Supervision Measures

According to the banking sector regulator, Risk-Based Supervisory (RBS) – which is a robust and forward-looking process, was adopted to analyze the risk profiling of the supervised institutions and enable a better evaluation of risks inherent in the business model of the institution.

“This process requires a continuous assessment of the institutions by assigning a Relationship Manager (RM), who is the focal point for the supervision of the institution as well as the Bank of Ghana’s primary contact and this will enable supervisors to tailor their examination of the institution following its risk profile.”
Bank of Ghana

BoG in its conclusion assured Ghanaians of efforts being put in place to effectively regulate and supervise the Regulated Financial Institutions (RFIs) towards promoting the safety and soundness and ensuring the stability of the banking industry with the ultimate objective of protecting depositors funds.