The Bank of Ghana has assured that, it is taking pragmatic steps to make the Deposit Protection Act operational by April this year.
When operational, the Act will protect depositors’ from unforeseen circumstances that may result in the collapse of any financial institution.
The Act, which was passed by parliament in 2016, is expected to undergo some amendments before becoming operational.
According to the bill, depositors whose monies get locked up in financial institutions during crisis may receive up to GHS6,250 in compensation.
This will be paid by the Deposit Protection Fund Corporation.
Speaking at the Graphic Business Forum, Governor of the Bank of Ghana, Dr. Ernest Addison stated that, the act will enhance confidence in the banking sector after the recent collapse of UT and Capital banks.
“You can have the most prudent application of banking rules, have the most effective oversight over the financial sector to anchor stability, but then you also need that deposit insurance to provide an additional safety net to boost confidence in the financial sector, the deposit insurance will protect the deposits of small depositors to reduce the risks in the financial sector”, he explained.
Dr. Addison maintained that the need for a deposit protection Act is long overdue since it will boost confidence in the banking sector.
He stated that the banking sector has seen tremendous growth which has also led to challenges that must be addressed by initiating such laws.
Dr. Addison was of the view that it will be counterproductive to rather debate the need for a deposit protection Act at this time when all the indications show it is greatly needed.
“I heard that there was a debate on whether there should be deposit insurance in Ghana. That for me was surprising because I thought that it was rather obvious, giving the developments that we have seen over the last ten years. The growth in the banking industry and the growth in the number of banks from nineteen to thirty four”.
(By: Anita Arthur)