The Bank of Ghana has issued a directive to all banks and Specialized Deposit-Taking Institutions (SDI) to voluntarily shut down their operations in the wake of the crisis facing the banking sector.
Financial institution willing to comply with the directive must have sufficient liquid assets to meet fees, costs and expenses of the liquidation process.
This directive is in line with Section 139 of Act 920 of the Banks and Specialised Deposit-Taking Institutions Act 2016.
In a statement released on Wednesday, September 5, the BoG stated that the directive is part of measures to ensure that “there is an orderly exit of a bank or SDI seeking to voluntarily wind up its operations/activities.”
According to BoG, the move will also ensure that the winding up of the operations of these institutions does not affect the stability of the banking sector.
In order for an institution to wind up, that institution must meet the legal requirements.
“Per the dictates of Section 139 of Act 930, a bank or SDI shall not wind up voluntarily unless the Bank of Ghana has certified in writing that the bank or SDI would be capable on its voluntary winding up, of meeting the obligations it has in respect of the depositors and creditors as the obligation accrue.”
During the process of liquidation, the institution in question is expected to appoint an official liquidator, and subsequently inform management of the BoG about the appointment.
This directive of voluntary winding up comes on the back of the collapse of some seven banks since 2017.
The process is expected not to exceed a period of 12 months, the central bank said.
In 2017, the Bank of Ghana ordered the GCB Bank to take over management of UT Bank and Capital Bank.
The decision was as a result of the two banks’ inability to meet some capital requirements.
On August 1, 2018, Governor of the Bank of Ghana, Dr. Ernest Addison announced the consolidation of some five banks: Beige Bank, Sovereign Bank, Construction Bank, The Royal Bank and UniBank.
The BoG established the Consolidated Bank Ghana to house these five distressed banks.
The directive by the Bank of Ghana to allow financial institutions to voluntarily wind up, also forms part of its measures to cleanse the banking sector to ensure the effective running of the sector.
By Irene Amesimeku| 3news.com| Ghana