A former finance minister, Professor Kwesi Botchwey, has urged the Bank of Ghana (BoG) to come up with a stable policy framework to help the banks get the necessary guidance in their operations.
He said the central bank sometimes confused the banks with policies that were not consistent, which collectively serve as a disincentive to the industry.
He said there had been some misalignment between policy intention and the real sector outcomes which needed to be addressed with a clearer policy framework.
Prof. Botchwey said that when he delivered the keynote address at the 120th anniversary public lecture of the Standard Chartered Bank.
“There is a misalignment between the orientation of the banks and public policy. Our policy statements are characterised by dis-coordination,” he stated.
He said there must, therefore, be a clearer statement of public policy and a better indication of what the national plan from the central bank should be.
He, however, urged the banks to also be proactive and be part of the solution when guidance is not coming from the central bank.
Change in mindset
Prof. Botchwey also advised the BoG to have a fundamental change in mindset from just a regulator to a central bank that also cared about growth and macro-economic stability of the country.
He said the banking industry was faced with challenges similar to what were experienced in the 1980s and the BoG had to provide proper guidance to the industry players.
“I believe we have great talents to reconfigure the banking system to meet the challenges of today in a global environment and all they need is the guidance to deploy their skills and talents,” he noted.
Supervision of MFIs
The former finance minister also called for a better supervision of Microfinance institutions, following their exponential expansion.
He said if not well supervised, those MFIs could create problems for the entire banking system by whittling down trust.
“Financial systems are built on beliefs and trust,” he said.
Challenges in the sector
The Board Chairman of Standard Chartered Bank, Dr Ishmael Yamson, touching on some of the industry’s challenges, said the increasing competition in the industry not only from their increasing numbers but also from technology financial companies posed bigger risks to the survival of the banks.
He said regulatory pressures both domestic and external had also become extremely difficult with severe consequences in the case of breaches.
He also pointed out that customers no longer wanted a physical bank to transact business because they had limited time, and added that how far banks were digitised and how far they were with technology to make banking a pleasurable experience would be the key success factors in the short to medium term.
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