BOG sets conditions for meeting new capital level

Bank of Ghana has outlined conditions for meeting the new capital level of GH₵400 million. According to a public notice by the Central Bank and signed by its secretary, Caroline Otoo , banks must recapitalize through fresh capital injection , Income surplus among others.

It however maintained that banks are not suppose to capitalize revaluation reserves,  reserves  on financial instruments  through other  comprehensive   income, statutory  reserves, credit risk reserves and unaudited profits.

The Bank of Ghana  also adds that all exiting banks must maintain  a minimum unimpaired paid up capital  as per section 28(1) and (3) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930)

Read the full Bank of Ghana notice below:

In accordance with Section 28(1) of the Banks and Specialised Deposit – Taking Institutions Act, 2016 (Act 930), the Bank of Ghana announces for the information of Banks and the general public that it has revised upward the minimum paid up capital for existing banks and new entrants to GH ₵ 400,000,000.00 (Four Hundred Million Ghana Cedis) with effect from 4thSeptember, 2017 under the following conditions;

1.     Banks are required to meet the minimum capital through

A)    Fresh capital injection.

B)    Capitalisation of income surplus.

C)   A combination of fresh capital injection and capitalization of income surplus.

  1. Banks are not allowed to capitalize revaluation reserves, reserves on financial instruments through other comprehensive income, statutory reserves, credit risk reserves and unaudited profit.
  2. All existing banks have up to 31st December, 2018 to meet the new minimum paid up capital requirement under the criteria indicated below;
  1. Maintain a minimum unimpaired paid up capital s per Section 28(1) and (3) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930) of GH ₵ 400,000,000.00 by end December 2018.
  2. In computing impairment of paid up capital, all banks are reminded that, in addition to the provisions in section 28(3) of the Banks and Specialized Deposit-Taking Institutions Act, 2016 (Act930), losses shall not be set off against credit risk reserve and unaudited profit.
  3. All banks which currently have been granted “Approval in Principle” shall comply with the new minimum capital levels by end December 2018.
  4. All pending applications for banking licence i.e. without “Approval in Principle” are required to meet the new minimum capital requirement of GH ₵ 400,000,000.00 and the feasibility reports accompanying such applications should be amended.
  1. Non-compliance with the new minimum paid up capital requirement shall be dealt with in accordance with section 33 of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930).

All banks and prospective applicants for banking licence should take note and be guided accordingly.

CAROLINE OTOO (MRS)

THE SECRETARY

Source: myjoyonline.com