The Bank of Ghana (BoG) will soon launch the Ghana Deposit Protection Corporation (GDPC), to sustain public confidence in the financial industry after the reforms so as to promote economic growth and development.
Mustapha Sarbeng, Deputy Chief of Banking Supervision-BoG, said launching the GDPC depositor-insurance scheme will add to the central bank’s safety net mechanisms – like the revocation of licences from a total 420 financial institutions since 2017 for varied operational infractions.
“Going forward, BoG has ensured that there are effective corporate governance systems for all financial institutions, and fit and proper guidelines rolled out. The BoG will also ensure that banks have economic capital, and we will the launch the GDCP before end of the year so as to strengthen the banking sector in Ghana,” he said.
Mr. Sarbeng deputised for the Governor of Bank of Ghana, Dr. Ernest Addison, and announced this when he made a presentation at the fourth regional town hall meeting held at Techiman.
The town hall meeting was under the theme ‘Accounting for financial sector resolution: Jobs and agriculture’. It was organised by the Ministry of Information and the Bono East Regional Coordinating Council.
The GDPC is an independent agency under the BoG, established under the Banking Act, 2016, 931, as amended to protect depositors against loss of insured funds if a GDPC-insured bank or specialised deposit-taking institution fails.
GDCP deposit protection covers the depositors of failed GDCP-depository institutions cedi-for-cedi, principal plus any interest accrued or due the depositor, through the date of default, up to at least GH¢6,250 for banks and GH¢1,250 for specialised deposit-taking institutions.
The banking sector in the country has gone through some radical reforms, resulting in the collapse of many financial institutions. According to the regulator, the unpleasant development was largely occasioned by poor corporate governance, low capital adequacy ratios and capitalisation, excessive risk-taking, and granting of loans to related and associated parties among others, leading to the insolvency of many banks
As part of the reforms, the BoG through a purchase and assumption transaction with GCB Bank allowed the GCB to take over some selected assets of UT and Capital Banks, and all deposits in 2017. Later in 2018, the central bank in collaboration with government formed the Consolidated Bank of Ghana (CBG) which brought five banks under its umbrella: these banks were UniBank, Beige Bank, Royal Bank, Sovereign Bank and Construction Bank.
This year, the Bank of Ghana also revoked the licences of 23 Savings and Loan companies and Financial Houses. Hitherto, the regulator had revoked the licences of 347 microfinance institutions.