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BoG outlines measures to boost liquidity in financial sector

The Bank of Ghana (BoG) has announced some measures to boost liquidity to the special deposit institutions (SDI) in the country.

This is to enable the institutions to support their customers and ensure that businesses do not lose access to critical funds in these uncertain times.

The measures include providing liquidity support to savings and loans and finance house companies facing temporary liquidity challenges, and strengthening the capacity of the ARB Apex Bank to provide liquidity support for rural and community banks facing temporary liquidity challenges in line with a framework to be agreed.

At the 94th press conference of the Monetary Policy Committee, the Governor of the Bank of Ghana (BoG), Dr Ernest Addison, said microfinance companies that met eligibility criteria agreed on would also qualify for the support from ARB Apex Bank.

He said eligibility for the facility and the terms and conditions on which it would be granted would be based strictly on the provisions of section 46 (A) and BOG’s updated liquidity support policy framework.

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New deadline for minimum requirement

Dr Addison said the deadline for SDIs (MFIs and RCBs) to meet new capital requirements would be extended to December 2021 to provide temporary relief for SDIs, given current economic conditions.

He said the central bank would also reduce the eight per cent primary reserve ratio for savings and loans companies, finance house companies, and rural and community banks to six per cent, and the 10 per cent primary reserve ratio for micro finance companies to eight per cent.

The governor explained that the bank would provide guidance to banks and SDIs on the accounting treatment of loan restructuring, classifications, provisioning and expected credit losses and prudential assessments of credit risk and capital ratios.

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Such guidance, he said, should help banks and SDIs to make quicker decisions on customers’ requests for loan restructuring.

“BoG expects fair and equitable treatment of all customers of banks and SDIs at all times, and especially at this time.

“The bank will strictly monitor business, conduct rules for banks and SDIs in their dealings with customers, particularly in relation to transparency and fairness in revision to loan terms and conditions, fee charges and related issues,” he noted.

He said the sector would be well-positioned to participate in the post-pandemic economic recovery and the Bank of Ghana would continue to monitor developments in the banking and SDI sector and take additional decisions as and when necessary.

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