Bank of Ghana to introduce universal banking

The Bank of Ghana (BOG) has decided to introduce a universal banking system in the country. In addition, it has also decided to introduce a foreign exchange trading market.

The First Deputy Governor, Asiedu-Mante, disclosed these at the launch of the 150th anniversary of Standard Chartered Bank PLC. According to him, the decision imposed by the Central Bank through licensing of banks for the purpose of doing banking business was being relaxed to enable others to take advantage of it.

He also explained that the move was to encourage Banks to trade more freely among themselves in the area of foreign currency. ?The implications are that there would be increased competition within the banking industry which will require banks to introduce innovative products and improve upon services to attract more customers,? he said.

Asiedu-Mante noted that the development was being driven by the financial and economic realities prevailing in the banking industry. He also said that BOG had identified some emerging concerns in the banking industry that threatened to disturb the stability of the banking sector.

According to him, increasing loan default rate and high cost of financial intimidation were the main concerns. ?Recent statistics have a disturbing trend. From December 2000 to September 2001, total loan rose from 16.2 per cent before settling at 24.7 per cent in September 2002,? he stressed.

He also said that the non-performing component or the portfolio also showed a similar trend from 11.9 per cent in December 2000 to 19.6 per cent in 2001 and by 19.1 per cent by September 2002. ?The most alarming development was that the non category with non-performing loans division still stood at 31.5 per cent in December 2000 rose to 34.9 per cent and increased again to 46.4 per cent by the end of September 2002,? he said.

On behalf of BOG, Asiedu-Mante advised that banks take steps to strengthen their credit administration systems and practices to ensure a very credit portfolio. The guest of honour for the occasion, Grace Coleman, who is also the Deputy Minister of Finance, noted that the increasing concerns raised by the bank?s stakeholders needed to be addressed.