Bank of Ghana must keep momentum to sanitize banking sector

Bank of Ghana3A cursory look at the banking sector in Ghana gives an impression that some rogues are running the sector. It is as if there are no rules or the banks are a law unto themselves.

Insider information about the country’s banking sector is scary, spells doom for the country’s economic future unless something drastic is done.

The Bank of Ghana seems to have suddenly woken up. It has sanctioned Access Bank and five forex bureax for flouting foreign exchange rules. Access Bank has been suspended from engaging in foreign exchange business for a period of six months and the licences of the forex bureaux have been revoked.

The five bureaux whose licences have been revoked are, Ocean Drive Forex Bureau, Kafsons Forex Bureau, Fatcoms Forex Bureau, Nabrim Forex Bureau and Sears Forex Bureau all located in Accra.

Access Bank was penalised for engaging in the externalization of various sums in favour of a company which had no account relationship with the bank and, in another instance, in favour of a company without any documentation. The transfers were made without the documentation required by the Foreign Exchange Act and Guidelines – the Foreign Exchange Act, 2006, Act 723.

The bureaux  were sanctioned for purchasing huge sums of foreign exchange from banks for onward sale to clients but failed to record these purchases in their books and also did not include the information in the returns submitted to the Bank of Ghana, thereby concealing the end use of such funds.

The central bank is the regulator and it must be seen and felt to be working. Its work is to ensure that banks operating in Ghana, operated within the banking laws of the country and failure to adhere strictly to the laws must draw the appropriate sanctions as stipulated by law.

But in a country like Ghana, where political parties, friends and cronies are more influential than the law it is possible to think that the central bank’s inaction over illegalities within the banking sector for a long time has been the work of influence peddlers and political cronies of the offending bankers.

It is still unthinkable that a banker who kept fake dollar notes in the Bank of Ghana vault was never prosecuted, he was simply removed and warned. Kind of told to go and sin no more.

This latest action by Bank on Access Bank and the forex bureax is laudable and must not be a nine day wonder. It should not be a flash in the pan – Bank of Ghana must be thorough and keep the momentum, that’s its Constitutional responsibility.

The Eurozone crisis seems to be escalating with Moody’s downgrading of Germany’s credit ratings. Germany’s AAA credit rating outlook has been lowered to negative. The rating agency cited “rising uncertainty” about Europe’s debt crisis. And this crisis was brought about by the banking sector! Ghana cannot afford an economic crisis brought on by the banking sector.

Until about two years ago, when China overtook Germany, the European country has always been the world’s leading exporter, and having the country’s credit rating downgraded to negative is not welcome news for the manufacturing giant.

Ghana doesn’t manufacture anything, and we need prudent economic management to sustain the economic growth the country has been enjoying for some time now.

The banks must therefore be held in check, before our fragile economy comes tumbling down.

By Emmanuel K. Dogbevi

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