The Bank of Ghana is enhancing the Specialized Deposit-Taking Institutions (SDI) sector to strengthen governance and address mission drift. Mr. Ismail Adam emphasized the importance of industry-led consultation for mergers and attracting strategic investors. The central bank set a compliance deadline for outsourcing regulations to ensure sector integrity, indicating its commitment to robust financial practices.
The Bank of Ghana (BoG) intends to enhance the Specialized Deposit-Taking Institutions (SDI) sector, acknowledging its crucial role in Ghana’s financial landscape. Mr. Ismail Adam, the Acting Head of Banking Supervision at BoG, emphasized the necessity of improving governance structures within the sector to achieve this objective.
In a statement made to journalists in Accra, Mr. Adam remarked, “The Bank of Ghana has seen the importance of industry-led consultation for industry-led mergers, which is intended to reshape that space, i.e. the SDI sector.” He highlighted the pursuit of attracting equity from strategic investors and the need to revamp governance frameworks around SDI operations.
Additionally, he pointed out concerns regarding mission drift, where SDIs engage in activities beyond their original licensing. Collaborating closely with the Ministry of Finance, BoG is working to address these issues, with a consultant already engaged to aid in drafting potential solutions. “So the way forward is to pull these two works that have been done by the consultant that was engaged by the Ministry of Finance together with the work that was done by the internal committee of the Bank of Ghana,” he stated.
Prior to Mr. Adam’s press engagement, Dr. Johnson Asiama, the Governor of BoG, indicated ongoing discussions with the Ministry of Finance about necessary reforms in the SDI sector. During the 123rd Monetary Policy Committee press conference, he affirmed, “yes, there has to be a cleanup of that sector, and we are engaging the Ministry of Finance.”
To ensure compliance with new directives regarding outsourcing, regulated financial institutions are mandated to meet the guidelines by July 1, 2025, or face penalties of up to GHȼ12,000. The Bank of Ghana is committed to enhancing the financial sector’s integrity, especially in the light of increasing instances of financial institutions outsourcing functions. Specific strategic functions, including those related to critical governance and risk management, are prohibited from being outsourced to maintain the sector’s integrity and operational independence.
In conclusion, the Bank of Ghana is taking significant steps to fortify the SDI sector through enhanced governance structures and a strict focus on compliance. The collaboration with the Ministry of Finance and the defined timelines for compliance underscore the bank’s commitment to creating a robust financial environment. By addressing mission drift and regulating outsourcing practices, BoG aims to improve the efficacy of SDIs and expand financial inclusion in Ghana.
Original Source: 3news.com
