By Kofi Ahovi
A renowned economist, Kwame Pianim, has called for the scaling up of the minimum capital requirement of universal banks up further from the GH¢60 million set by the Bank of Ghana.
Pianim proposes that the minimum requirement should be set at GH¢200 million to enable the banks to effectively undertake projects that would facilitate the growth of the economy bringing it a par with developed nations.
Speaking to BusinessWeek, he explained that the current GH¢60 million though significant than the previous amount does not encourage the banks to single handedly take up huge projects.
He suggested that the banks should be encouraged to consider mergers and acquisitions within the next five years which would make them more formidable in the years to come.
“To make meaningful investment in the oil and gas industry as well as the mining industry, the banks needs to have substantial capital base to support investment in the two sectors, other than that the companies would have to look elsewhere for the capital,” Pianim advised.
The new minimum capital requirements, which were set by the BoG in 2008, are to be met in stages, involving differing minimum capital levels for indigenous and foreign banks, during the first stage which has December this year as its deadline, but a common minimum capital level by the end of the second and final stage, which has the end of 2012 as its deadline.
Banks with majority foreign owned equity are required to have minimum capital of GH¢60 million by the end of this year. However, banks with majority Ghanaian owned equity are required to have minimum capital of first GH¢25 million by the end of this year, but must have increased this to at least GH¢60 million by the end of 2012.
So far all the banks with majority foreign owned equity have met this requirement. Apart from Ghana Commercial Bank (GCB) and Agricultural Development Bank (ADB) that have met the GH¢60 million ahead of the 2012 deadline, the rest of the banks with majority local owned equity have made giant strides in meeting the target.
A renowned economist, Kwame Pianim, has called for the scaling up of the minimum capital requirement of universal banks up further from the GH¢60 million set by the Bank of Ghana.
Pianim proposes that the minimum requirement should be set at GH¢200 million to enable the banks to effectively undertake projects that would facilitate the growth of the economy bringing it a par with developed nations.
Speaking to BusinessWeek, he explained that the current GH¢60 million though significant than the previous amount does not encourage the banks to single handedly take up huge projects.
He suggested that the banks should be encouraged to consider mergers and acquisitions within the next five years which would make them more formidable in the years to come.
“To make meaningful investment in the oil and gas industry as well as the mining industry, the banks needs to have substantial capital base to support investment in the two sectors, other than that the companies would have to look elsewhere for the capital,” Pianim advised.
The new minimum capital requirements, which were set by the BoG in 2008, are to be met in stages, involving differing minimum capital levels for indigenous and foreign banks, during the first stage which has December this year as its deadline, but a common minimum capital level by the end of the second and final stage, which has the end of 2012 as its deadline.
Banks with majority foreign owned equity are required to have minimum capital of GH¢60 million by the end of this year. However, banks with majority Ghanaian owned equity are required to have minimum capital of first GH¢25 million by the end of this year, but must have increased this to at least GH¢60 million by the end of 2012.
So far all the banks with majority foreign owned equity have met this requirement. Apart from Ghana Commercial Bank (GCB) and Agricultural Development Bank (ADB) that have met the GH¢60 million ahead of the 2012 deadline, the rest of the banks with majority local owned equity have made giant strides in meeting the target.
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