BoG sets 60% convertible currency capital for foreign banks
By Praisebell Rosemond Larbi
The Bank of Ghana has strengthened regulatory oversight of the emerging non-interest banking sector with the introduction of new prudential guidelines aimed at ensuring stability, enhancing capital quality, and reducing currency and liquidity risks among operators.
Under the draft framework released for stakeholder consultation, foreign-owned non-interest banking institutions will now be required to inject at least 60 percent of their minimum paid-up capital in convertible foreign currency, a move designed to bolster resilience within a segment of the financial market that continues to attract significant interest.
For the first time, the Central Bank is insisting that this higher-quality capital must be deployed strictly into approved Shariah-compliant financial instruments, in line with the non-interest financial principles that underpin the model. The Bank believes this measure will help safeguard the system against exchange rate vulnerabilities, particularly given the structure of foreign-owned institutions and the currency mismatches often associated with cross-border financial flows.
According to the draft guideline, the Bank of Ghana will publish detailed minimum capital requirements and application fees for every category of Non-Interest Financial Institutions (NIFIs), covering institutions such as development finance entities, microfinance companies, and rural and community banks seeking to operate in the non-interest space.
Final operating licences will only be issued after eligible institutions pay the mandatory licensing fees, while all existing and future operators will be required to settle their annual supervisory fees by January 31 of each year. The Central Bank also reserves the discretionary authority to impose additional capital buffers where necessary to maintain financial sector resilience.
The regulatory framework, anchored in both Act 930 and Act 1032 sets out the core principles governing non-interest institutions. These include strict adherence to approved governance standards, permissible non-interest financing contracts, operational guidelines for Shariah compliance, and the supervisory responsibilities of the Non-Interest Financial Advisory Council and the Non-Interest Banking Advisory Committee.
The Bank of Ghana maintains that the new measures are essential to consolidating confidence and ensuring that the growing non-interest banking ecosystem evolves in a safe, transparent, and sustainable manner.
