Bank of Ghana’s Initiative to Strengthen the SDI Sector
The Bank of Ghana is implementing measures to enhance the governance and operational standards of Specialized Deposit-Taking Institutions (SDIs). Mr. Ismail Adam emphasized the importance of strategic investor equity, addressing mission drift, and reinforcing governance frameworks. Collaborations with the Ministry of Finance are underway, with regulations set to ensure compliance by July 1, 2025. Key functions are prohibited from outsourcing to maintain integrity within the sector.
The Bank of Ghana (BoG) is poised to enhance the framework of Specialized Deposit-Taking Institutions (SDIs) due to their pivotal role in Ghana’s financial ecosystem. Mr. Ismail Adam, Acting Head of Banking Supervision at the BoG, underlined the significance of bolstering governance structures within these institutions during a press conference on April 4.
To improve the sector, the BoG favors industry-led consultations for potential mergers. Mr. Adam indicated the focus on attracting equity from strategic investors while ensuring that the governance frameworks are robust. He stressed the necessity of implementing effective governance arrangements to facilitate improved operations within the SDI sector.
Furthermore, Mr. Adam addressed the concern of mission drift within SDIs, noting that these institutions occasionally engage in activities outside their licensed scope. To mitigate this, the Bank of Ghana is collaborating closely with the Ministry of Finance. An external consultant has been appointed to draft recommendations alongside an internal committee from the BoG to refine the operational space for the SDIs.
The ultimate goal is to revitalize this sector to better serve markets often left out of the financial system, promoting both credit access and deposit mobilization. This synergistic approach will ensure a more comprehensive financial inclusion strategy in Ghana.
Prior to Mr. Adam’s statements, Dr. Johnson Asiama, the Governor of the BoG, indicated ongoing discussions with the Ministry of Finance aimed at addressing necessary reforms within the sector. During the Monetary Policy Committee meeting held on March 28, he affirmed the need for a thorough clean-up of the SDI sector.
Regulated financial institutions have been given a deadline of July 1, 2025, to comply with BoG directives intended to reinforce the sector’s integrity. Failure to adhere will incur administrative penalties, emphasizing the Bank’s commitment to fostering a sound and resilient financial environment.
The directives stipulated by the BoG also delineate specific roles that may not be outsourced, thereby safeguarding critical functions like strategic oversight, credit decision-making, compliance, and risk management. These prohibitions are essential for ensuring that decision-making processes remain independent and accountable, showing the Bank’s dedication to maintaining high governance standards within the financial sector.
The Bank of Ghana is actively working to strengthen the governance of Specialized Deposit-Taking Institutions (SDIs) to enhance their operational integrity and efficiency. Collaborations with the Ministry of Finance and other stakeholders aim to curb mission drift and ensure adherence to licensing mandates. The BoG’s comprehensive strategy underscores a commitment to financial inclusivity and robust regulatory standards, ultimately supporting the growth and stability of Ghana’s financial landscape.
Original Source: 3news.com
