The Bank of Ghana has announced it will now assess people appointed by financial institutions into key positions using its new fit and proper persons directive.
The directive is the central bank’s latest move to ensure sound corporate governance as a way of instilling confidence in the banking sector.
According to the Fit and Proper Directive, those that will be subjected to the scrutiny include shareholders, directors or persons holding key management positions within a bank, savings and loan company, finance house or a financial holding company.
Per the new directive, these key personnel will be assessed by both the Bank of Ghana as well as the appointing financial institution based on some eight different criteria.
These criteria include financial integrity, reputation, demonstration of sufficient appreciation of the business of banking, academic/professional qualification, and experience. The rest are conflicts of interest, time commitment, and collective suitability.
This assessment, the central bank argues, is being carried out to ensure that persons acquiring a significant equity interest in a regulated financial institution, or appointed as Directors or Key Management Personnel do not pose risks to depositors and creditors of their institutions, thus maintaining confidence in the banking sector.
The directive stipulates that anyone that is deemed as not being fit and proper shall not be permitted to own shares, hold key management or directorship position in a regulated financial institution.
However, those that are disqualified on the basis of flouting the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), may not be permitted to engage in deposit-taking business for a period not exceeding ten (10) years from the date of the determination.
The Bank of Ghana’s fit and proper persons directive emanates from provisions of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930) and the Bank of Ghana Act 2002 (Act 612), as amended by Act 738, which empowers the bank to have overall supervisory and regulatory authority in all matters relating to deposit-taking business.
“The aforementioned Act mandates the BOG to regulate, supervise and direct the banking and credit system and ensure the smooth operation of the financial sector including the promotion and maintenance of financial stability. To this end, the BOG is responsible for the licensing, supervision and regulation of the banking and credit system in Ghana,” the central bank explained in its directive.
(By Richard Annerquaye Abbey)