The acting Head-Banking Supervision Department of the Bank of Ghana (BoG), Ismail Adam, at a post-Monetary Policy Committee (MPC) media engagement after the Bank’s 123rd MPC meeting said BoG is working closely with the Ministry of Finance and other stakeholders to develop a coherent plan that will revitalise the Specialised Deposit-taking Institutions (SDI) sector.
It is aimed at improving credit delivery and strengthening deposit mobilisation, especially for underserved markets.
“The Bank of Ghana is now emphasising industry-led consolidation to reshape the SDI sector. This involves attracting equity from strategic investors – some are already engaging SDIs and revamping governance to ensure proper oversight,” Mr. Adam said.
The regulator’s approach is designed to counteract what it sees as a deviation among some institutions in the sector, which are flouting their original purpose of extending financial services to the underserved and excluded.
Consequently, BoG has set up an internal committee – complementing a separate team of consultants engaged by the Finance Ministry to draft a roadmap for strengthening the SDI landscape.
The SDI sector includes rural and community banks, savings and loans companies, finance houses and microfinance institutions. However, many of these entities have been grappling with weak capitalisation, governance lapses and mounting complaints from depositors over unfulfilled obligations.
The reform comes at a time when there is continued pressure from Ghana’s development partners to strengthen the country’s financial sector resolution framework. The International Monetary Fund (IMF), as part of its ongoing programme reviews, has flagged the need for more robust mechanisms to deal with failing institutions.
“The absence of an industry-funded resolution mechanism – akin to the model used in Nigeria – has exacerbated the problem,” Mr. Adam stated.
In Nigeria, banks and other financial institutions contribute annually to a resolution fund; enabling timely interventions without triggering taxpayer-funded bailouts.
By contrast, Ghana still relies on ad hoc fiscal arrangements when intervention becomes necessary – a model that has proved problematic during past banking sector clean-ups.
The new framework seeks to address these shortcomings by encouraging consolidation among SDIs through private capital, ensuring that only well-governed and solvent entities remain in operation.
Going forward, BoG intends to avoid taxpayer-funded interventions by strengthening internal supervisory tools and aligning its crisis response model with global best practices that emphasise accountability and cost efficiency.
