Inasmuch as it is painful and costly when the law catches up on Banks and Specialised Deposits taking Institutions (SDIs), and the only option left is for their operating licenses to be revoked; these institutions know exactly what time it is when the law is about closing in on them.
That aside, Bank of Ghana’s supervisory framework, checks and balances also preinform these banks when they fall within the remit of being cracked down as a result of their failure to comply with regulations.
The Banks and Specialised Deposits taking Institutions (SDIs) Act of 2016, Act 930, spells out the processes and procedures involved when the licences of these Banks and SDIs are nearing revocation even before they undergo receivership (Section 123&139).
So for some of us we saw a fight in futility when Unicredit after the revocation of its licence by BoG, headed to the Court of Appeal to appeal a decision of the High court, and won after the High Court had initially upheld the decision of BoG for doing no wrong.
“BoG aggrieved and dissatisfied with the decision of the appeals court” also filed an appeal at the supreme Court against the ruling of the Court of Appeal.
Finally, Supreme Court had to rule in BoG’s favour by upholding the High Court’s ruling, that, BoG committed no error in revoking the licence of Unicredit.
Sections 123 of the Act gives BoG the authority to revoke the licence of Banks and SDIs that are insolvent or banks that fail to meet liquidity requirements.
The bone of contention regarding this case therefore was with Section 16(3&4) as to whether or not BoG followed due processes before revoking Unicredit’s licence which ofcourse BoG did, per all available records.
Inasmuch as BoG is not above the law or does not weild absolute power to revoke licences of Banks and SDIs, Section 16(7) gives BoG the discretionary power, without prejudice to Section 16 (1,2,3&4), to revoke the licence of Banks & SDIs in cases of emergency, or in the public interest without notice to the affected Bank(s) or SDIs.
Section 96, 101 & 107 provides for BoG the appointments of examiners, advisors and Official administrators in that order. So ordinarily, once a Bank or SDI hits the first level and the bank fails to comply with guidance from the examiner, it is likely it will be hiting the red line.
In conclusion, there are guidelines, of which BoG is the sole regulator, to ensure financial stability, maintain public interest, manage risk, prevent fraud and to align with international standards and best practices without which collapse of the banking sector and economic retrogression are imminent.
Welbeck Ato Sefah
TheMerchant®️
Economist
