Dr. Johnson Asiama
The Bank of Ghana (BoG) has urged banks to formalise robust policies governing third-party collateral arrangements to reduce growing fraud risks associated with such transactions.
Speaking at the opening of the Post-130 Monetary Policy Committee (MPC), engagement with Heads of Banks, Governor of the Bank of Ghana, Dr. Johnson Asiama, said the Central Bank has observed instances involving fraudulent land title documentation used to support credit applications.
“Banks must formalise robust policies governing third-party collateral, strengthen due diligence procedures, enforce strict verification standards, address control weaknesses, and take decisive disciplinary action against staff involved in misconduct.
“Properties have been pledged without the knowledge of legitimate owners, ownership documents have been forged, and consent letters falsified,” he said.
This, he explained, has severe implications to compromise loan recoveries, weaken balance sheets and public confidence and therefore urged the chief executives of banks to act on them.
He said the Central Bank continues to advance a comprehensive regulatory reform agenda aimed at enhancing the resilience, soundness, and stability of the financial system citing examples such as guidelines on liquidity risk management, liquidity monitoring tools, stress testing, recovery planning, interest rate risk in the banking book among others.
Dr. Asiama mentioned that the reforms are aligned with international best practices and are intended to ensure that its regulatory framework remains robust and forward-looking in an increasingly complex operating environment.
The Governor also stated that total banking sector assets expanded by 26.6 per cent to GH¢493.9 billion with capital adequacy strengthened significantly while the industry Capital Adequacy Ratio increased to 22.3 per cent from 17.5 per cent a year ago.
According to the Governor, the developments demonstrate the resilience of the banking sector and reflect the collective efforts undertaken by all institutions.
He, however, urged banks not to be complacent but rather continue to strengthen credit underwriting standards, improve recovery processes, and comply fully with regulatory requirements in order to help reduce non-performing loans to tolerable prudential targets.
“Banks must go beyond financing and increasingly position themselves as strategic partners to businesses. This includes providing business advisory services, supporting entrepreneurship, facilitating market access, and developing export clinics that help businesses identify opportunities in markets where your parent institutions, subsidiaries, and strategic partners already operate,” Dr. Asiama added.
By Ebenezer K. Amponsah