Strengthening Ghana’s Specialized Deposit-Taking Institutions Sector

The Bank of Ghana is taking steps to strengthen the Specialized Deposit-Taking Institutions (SDI) sector by enhancing governance structures, addressing mission drift, and regulating outsourcing practices. The initiative aims to attract strategic investors and ensure that SDIs operate within their intended scope. Compliance with new directives is mandatory by July 2025 to avoid penalties, reinforcing the commitment to financial sector integrity.

The Bank of Ghana (BoG) is set to enhance the Specialized Deposit-Taking Institutions (SDI) sector due to its significant role in Ghana’s financial ecosystem. Mr. Ismail Adam, the Acting Head of Banking Supervision, emphasized the need to strengthen governance structures within these institutions. This initiative aims to facilitate equity investment from strategic investors and reshape the operational landscape of the SDIs.

Furthermore, Mr. Adam mentioned a focus on addressing mission drift within the SDIs. This refers to the deviation from their originally intended activities. To rectify this, the Bank of Ghana is collaborating with the Ministry of Finance and has engaged a consultant to draft necessary reforms. Efforts include aligning the work of the consultant with that of the Bank’s internal committee, aiming to revitalize the sector and broaden access to financial services.

Earlier, Dr. Johnson Asiama, the Governor of BoG, confirmed ongoing discussions with the Ministry of Finance to clean up the SDI sector. During a press conference for the Monetary Policy Committee, he acknowledged the need for a comprehensive cleanup of the sector, working in tandem with the Ministry.

Regulated financial institutions are required to adhere to new directives, effective by July 1, 2025, failing which they may incur a penalty of GHȼ12,000. The BoG’s move underlines its commitment to maintaining a robust financial sector by enforcing strict governance protocols. The directive specifies which functions can be outsourced and prohibits outsourcing of critical strategic functions to preserve integrity within regulated financial institutions.

Examples of functions prohibited from outsourcing include board responsibilities, strategic oversight, credit decision-making, compliance with financial regulations, and essential risk management activities. This initiative aims to ensure that key operational roles remain integral to the institutions’ efficiency and decision-making integrity.

In conclusion, the Bank of Ghana is actively working to bolster the Specialized Deposit-Taking Institutions sector through governance improvements and strategic guidance. By addressing mission drift and enforcing strict outsourcing regulations, the BoG is dedicated to maintaining the financial integrity and inclusiveness of the sector. Engaging with the Ministry of Finance further enhances these initiatives, signaling a commitment to cleaning up the sector by the stipulated deadline. Such measures are vital to ensuring robust financial services for all Ghanaians.

Original Source: 3news.com