Banks to develop framework on risk premium build-up

The Bank of Ghana (BoG) has initiated steps to ensure that banks do not pass on their operational inefficiencies and overhead costs to their clients.

To this end, it said it would align compensation with overall bank performance by linking it to clear parameters including the quality of a bank’s assets.

This among others was to boost credit delivery and improve intermediation by banks.

The Governor of Bank of Ghana, Dr Ernest Addison announced this in a speech read for him at a two-day training workshop for members of the Institute for Financial and Economic Journalists (IFEJ).

The workshop held at Koforidua in the Eastern Region was on the theme: “Delivering sustainable and balanced growth in the banking sector.”

To further deepen transparency in the determination of lending rates, Dr Addison said banks would be required to develop and publish a clear framework on the risk premium build-up that impacts on an individual borrower’s credit profiles.

He noted that the Central Bank was also in discussion with key stakeholders to explore the creation of a central bank digital currency with the possibility of issuing the e-Cedi in the near future.

The Governor further indicated that the Sustainable Banking Principles (SBPs) for banks which was recently launched by the central bank would also provide the guiding principles to underpin effective Environmental and Social Risk Management (ESRM) policy frameworks for banks in their credit delivery.

Dr Addison commended the media especially financial and economic journalists for partnering the Bank of Ghana in churning out information to the public about the banking sector.

“Let me use this opportunity to thank the press and all journalists, particularly, you the financial and economic journalists who have had the herculean task of breaking down complex and economic and financial issues into simple comprehensible language to the ordinary Ghanaian. This task is a difficult one and we salute you,” he stressed.

Financial Journalist, Mr Lloyd Evans on his part appealed to the BoG to ensure regular education on financial literacy in order to deal with issues of scammers and ponzy schemes in the country.

This he noted would lighten up the system to check dubious entities taking advantage of the gullible people.