Dr. Gideon Boako
The Member of Parliament (MP) for Tano North, Dr. Gideon Boako, has called on the government to clarify the allocation of GH¢50 million intended for the establishment of the Women Development Bank given the paid-up Capital required for establishing a new bank.
Dr. Boako’s request comes in the wake of a recent announcement by the government to establish a women’s’ Development Bank with a budgetary allocation of GH¢50million.
He said the minimum paid up capital requirement for both existing banks and new entrants was revised on September 11, 2017 increasing it from GH¢120 million to GH¢400 million as specified in NOTICE NO. BG/GOV/SEC/2017/19 in accordance with Section 28 (1) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930).
The law maker who is also the economic advisor to former Vice President, Dr. Mahamudu Bawumia on Finance stated that on March 18, 2021, the Bank of Ghana issued a directive on Licensing and Capital requirements for Development Finance Institutions (DFIs), pursuant to the Development Finance Institutions Act, 2020 (Act 1032).
He said the directive, contained in NOTICE NO. BG/GOV/SEC/2021/04 categorises DFIs into four main classes, each with specific capital requirements.
He said “Class 1, Wholesale Development Finance Institution: GH¢800 million, Class 2, Retail Development Finance Institution: GH¢600 million. Class 3, Guarantee Development Finance Institution: GH¢300 million, Class 4, Hybrid Development Finance Institutions (depending on the combination of activities undertaken)”
The rest are Class 4a, Wholesale, Retail & Guarantee: GH¢1.2 billion, Class 4b, Wholesale & Retail: GH¢1 billion, Class 4c, Wholesale & Guarantee: GH¢1 billion and Class 4d (Retail & Guarantee: GH¢800 million.
According to him, given these statutory requirements, it is important for the government to critically assess whether the government’s proposed GH¢50 million allocation for the establishment of the Women Development Bank is intended for a Universal Bank, Development Bank, a Savings and Loans Company, or a Microfinance Institution?
“Clarity on this matter would be beneficial to ensure the initiative aligns with existing regulatory frameworks,” he added.
By Ebenezer K. Amponsah