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Mr. Alhassan Andani, President of the Ghana Bankers Association, speaking with Mr. Charles Benoni Okine, Deputy Editor of Graphic Business, when he took his turn at GraphicTalks360.
The Chairman of the Ghana Bankers Association, Mr. Alhassan Andani, has categorically stated that the country’s banks are not using their free capital to buy Treasury bills at the expense of lending to the private sector.
He said that the Bank of Ghana (BoG), in releasing excess liquidity to banks for future loans to the private sector amid the COVID-19 outbreak, was very categorical in asking banks not to use the purchase treasury of additional liquidity, a directive. banks were fully complying.
Mr. Andani cleared up the issue when he took his turn on GraphicTalks360, a live online talk show hosted by Graphics Company Deputy Editor, Mr. Charles Benoni Okine. The full interview is currently on dailygraphic live on Facebook and You Tube.
BoG measures
The BoG, as part of its COVID-19 measures, lowered the primary reserve requirement for banks from 10 percent to eight percent to free up more liquidity for banks to lend to the private sector.
But the central bank’s July 2020 Banking Sector Report showed that, while net loans grew by 14.7 percent in the first half of the year, investment in bills, securities, shares, among others, increased by 35 percent within the period, raising concerns that banks could be investing the released capital in Treasury bills, contrary to the regulator’s directive.
But Mr. Andani said that this was not the case, and stated that “Banco de Gobierno was very categorical in telling the banks that the additional liquidity it was providing should not go to Treasury bills.
He said the central bank followed this up by introducing reporting systems in which banks can report their credit to the private sector against the number of treasury bills they are buying to make sure it is not the released liquidity the banks were using. to buy the T-Bills.
“The BoG has put measures in place to ensure that we do not buy T-Bills with that released capital, so most of it has gone to the private sector,” he said.
Read: President Akufo-Addo relaxes more COVID-19 restrictions.
Support to the private sector
Andani said that the country’s banks since the outbreak of the COVID 19 pandemic had supported the private sector in the amount of ¢ 2.7 billion GH in May 2020.
He said the support was in the form of loan restructuring, interest cancellations and the granting of new facilities to some companies.
Praise BoG
He congratulated the Bank of Ghana for its policy actions in the wake of the pandemic, which it said helped banks provide this kind of support to the private sector.
“BoG took political measures that were very supportive to the industry. They took capital protection measures by revising our capital buffers down and allowed banks to have greater absorptive capacity to do business with the capital that we have.
“They also gave us some liquidity because in pandemics like this the number one need is liquidity, which is the ability to supply cash to the economy, so they took steps to improve the supply of liquidity to banks,” he said.
He said the cost of credit was also lowered by lowering the policy rate from 16 percent to 14.5 percent.
“There were also other measures that impacted the rates of the Treasury bills and also due to the greater supply of liquidity to the banks, the interbank interest rates also fell. Our general benchmark rate, which is the basis on which we value our credit to the public, dropped from 16% to 14.7%.
“From the virus outbreak until now, in most sectors, they would probably have seen a 400 basis point drop in interest,” he noted.
He said the measures also allowed banks to restructure their loans, give some holidays on loans, pay off some interest and grant new loans to companies to keep them running.
Bank fraud
Mr. Andani, who is also the Managing Director of Stanbic Bank Ghana, noted that the level of fraudulent activity in the banking industry was not significant in affecting public confidence in the sector.
Although fraud cases in the sector have increased, he said banks have been aware of the problems when it comes to fraud and, as a result, detected and stopped most of these cases in the industry.
The Bank of Ghana recently reported that the total number of cases in the industry increased marginally.
“I agree that this is not good news, but the good news is that on a scale of one to 10, you probably have $ 9.75 safe with your funds despite the fraud cases that were reported,” said the Mr. Andani.
He said banks were constantly implementing measures to protect depositors’ funds and constantly improving their safeguards to ensure they minimize and eliminate such breaches in the industry.
“Ghana is among the top 100 countries that are attacked by cybercriminals, but about 99 percent does not result in anything as we can detect and solve it,” he noted.
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