Banking sector reforms: Action was necessary to build a robust financial sector – NAPO

It appears government officials and particularly Bank of Ghana officials, would have to keep explaining for a little longer why the financial sector clean-up was a necessary evil.

Following arguments for and against the exercise including even the political twists often attached to it, government officials have had to reiterate many times why it was necessary. The latest to add his voice is the Education Minister, Dr. Matthew Opoku Prempeh, who spoke at the 10th graduation ceremony of the Chartered Institute of Bankers in Accra.

The revocation of the licenses of nine universal banks by the Bank of Ghana over insolvency and several infractions; is one of Ghana’s biggest clean-up of the traditional banks sector.

This was followed by the revocation of licenses for 347 micro-finance companies, of which 155 had already ceased operations, 39 micro credit companies or money lenders, 10 of which had already ceased operations, and 15 savings and loans companies, eight finance house companies, and two non-bank financial institutions that had already ceased operations.

The latest action by the Securities and Exchange Commission, SEC, also saw the revocation of licenses for 53 fund management companies that were insolvent and were struggling to pay clients.

Some of them had also ceased operations long before the SEC action.

While many Ghanaians have commended the regulators for these actions, others have accused them of being high-handed in their approach due to the impact on the economy and jobs.

For most people who argue along these lines, they blame the regulators for shirking their supervisory roles. Others also believe this action is better late than never, and it is necessary to restore confidence in the country’s financial sector and make it robust.

Speaking at the 10th Graduation of the Chartered Institute of Bankers in Accra, the Education Minister, Dr. Matthew Opoku Prempeh, also agreed with this view, adding that the clean-up is already yielding some benefits in the banking sector.

He said professionals in the financial sector ought to exhibit the highest level of standards and ethics, as a lot of the problems exposed in the sector were largely caused by blatant disregard for good corporate governance principles.

“The banker has the responsibility to protect the integrity of the banking system. Failure to perform this diligently will adversely affect the system. It is for this reason that the recent cleanup exercise undertaken by the Bank of Ghana in the industry, I think it was in the right direction”he noted.

The President of the Chartered Institute of Bankers Ghana, Rev. Mrs. Patricia Sappor, believes the future of the country’s financial sector looks better. Read Full Story