Bank of Ghana will commence implementation of the deposit insurance scheme in the second quarter of 2018.
Parliament, in 2016, passed the Deposit Protection Act, which seeks to establish a deposit insurance (DI) scheme to protect depositors in the event of bank failure.
The scheme, among other things, seeks to safeguard the savings of individual depositors in the country in order to build trust in the formal banking system, and contribute to stabilisation and development of the financial system in Ghana.
The BoG governor said this while speaking at the first edition of this year’s Graphic Business/ Stanbic Bank breakfast meeting.
According to him, deposit insurance was an additional safety net for depositors.
It was on the theme: “Deposit insurance: A catalyst for a stronger banking industry,” the event afforded players in the banking sector an opportunity to deliberate on the advantages and disadvantages of deposit insurance.
The central bank governor said: “The idea is to have an additional layer of protection in addition to what the central bank normally does to protect and provide enough oversight for the financial sector”.
He said the country could have the most prudent application of banking rules, have the most effective oversight for the financial sector – but then, “you also need that deposit insurance scheme to provide an added safety net to boost confidence in the financial sector, especially the small depositors.”
He said this is the reason BoG raised capital requirements for the banks, and all things being equal “we expect that with strong and well-capitalised banks, the sector will be well-positioned to offer safer services”.
He said there are arguments about the new capital requirement, and that foreign ownership of banks is more prevalent, “but the central bank’s data did not suggest this of the banking sector”.
The Governor said the central bank wants to see a country that is economically diversified and having a financial sector that assists in structural transformation.
He said the private sector has a big role to play in that agenda – adding that the financial sector is expected to be well positioned to finance these private sector activities.
“Going forward this year, we expect that we will continue to tighten the regulatory standards and ensure that the regulated institutions have adequate levels of capital; and we will issue the guidelines to ensure compliance with a minimum capital requirement,” he added.
Project Coordinator-Ghana Deposit Protection Cooperation, BoG, Mr. Franklin Belnye, said the Scheme is the fourth component of the financial safety net.
He said currently there are some amendments, which need to be done, so the scheme will be sent to parliament to ratify those changes for implementation.
He said banks contribute into a pool that they can fall on in case of any eventualities – adding that the scheme will also encourage financial inclusion and access to formal financial services in the country.
He said government is yet to sign an agreement with the German government, where an amount of 13 million euros will be made available for the scheme.
Managing Director-Stanbic Bank, Mr. Alhassan Andani, said the scheme seeks to ensure that in the event of any money-loss, the consumer will still get at least some money back.
…with Kofi Owusu Tawiah