The Governor of the Bank of Ghana (BoG), Dr Abdul Nashiru Issahaku, has given the strongest indication that with the debt owed to commercial bank by the Volta River Authority (VRA) now partly settled, performance in the banking sector will improve tremendously.
The government, at the beginning of this month, made an upfront payment of GH¢250 million to the lender banks as part of the Legacy Debt owed by the VRA.
Under the agreement reached with the banks, the remaining balance is expected to be paid within a period of five years with quarterly principal and interests.
Speaking at the annual luncheon of the Ghana Association of Bankers (GAB) in Accra yesterday, Dr Issahaku said the first payment of the debt should provide relief to the commercial banks in the country.
He re-echoed the concerns and perhaps the biggest headaches of financial institutions about non-performing loans (NPLs) sitting on their books, a situation that affected their operations which in turn had a toll on their performance.
“ That notwithstanding, the payment made so far will go a long way to aid the operations of the banks and enhance their activities,” he said.
The 33rd Annual General Meeting (AGM) brought together executives and members from the 32 banks that make up the association.
The annual meeting brought members together to wine and dine, as well as strengthen relationships among themselves.
According to the annual report of the GAB, the industry’s performance was a reflection of the banks’ strategic plans and the good decisions it took during the year under review.
It also indicated that members of the association paid over GH¢2million as tax to the government of Ghana during the year under review.
“Total industry deposits increased by seven per cent over the 2014 level to over GH¢43million,” the report added.
Addressing the media earlier, the President of GAB, Mr Alhassan Andani, also affirmed that the first tranche of money paid to the commercial banks would enhance their performance.
Mr Andani, who is also the Managing Director of the Stanbic Bank Limited, expressed the hope that some of the money would be paid at the end of September and December this year.
When asked about his take on the current policy rate released by the BoG, he indicated that the association could not react to that now.
On small and medium-scale enterprises (SMEs) and lending by the banks, Mr Andani dismissed claims that commercial banks usually found it difficult to lend to them.
He advised that there was the need to always structure their management and administration properly before the banks could easily lend them, adding “we always try to even assist them to restructure their management in order to meet up to standards.”
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