In every industry, there are strigent rules and regulations which are meant to be followed to ensure strict compliance and avoidance of abuse.
In the banking sector, the situation is not different, hence the establishment of the Bank of Ghana (BoG) as the regulatory body to ensure that the banking sector runs smoothly.
In spite of the existence of the central bank, players in the industry seem to be finding ways and means around the rules and regulations that govern their operations in an attempt to either increase profitability or ensure their survival in the competition.
The voilation of the Foreign Exchange Act, 2006, (Act 723) is one typical example and this has given the central bank the cause to move to check the incessant disregard for the Act.
The bank is currently seeking more jurisdiction under the Act to enable it to impose stiffer sanctions on banks and forex bureau operators that flout it.
The Central Bank is of the view that instead of merely suspending recalcitrant players in the industry as per the present Act, there should be a situation where it can be allowed to completely ban offenders to help check the growing indiscipline within the industry.
Consequently, the Governor has said the BoG was collaborating with the Ministry of Finance and Economic Planning (MoFEP) to review the Act and put it in tandem with current developments on the market. (See front page)
But the Ghana Association of Bankers (GAB), which is the umbrella body of banks in the country, has said that the BoG would have to justify its request for more jurisdiction in the proposed review of the Act.
In an environment of strong competition, it is obvious that players within an industry will try many means to remain profitable.
Within the insurance industry, there are similar concerns raised by the industry regulator because competition has forced the players to engage in all manner of tactics, including premium undercutting, in their quest to stay afloat in the business.
The GRAPHIC BUSINESS therefore, finds the move by the central bank timely and necessary although long overdue.
We are of the view that banks in the country must survive on the back of genuine business practices that have positive impact on their customers, corporate Ghana and the economy as a whole.
Therefore, any move that flouts the laws should not be entertained because of the seeming negative impact on the economy.
The GRAPHIC BUSINESS finds it difficult to phantom why the struggling banks would not merge with the stronger ones to become more formidable to survive competition.
It is the wish of the paper that the Ministry of Finance will give its fullest cooperation to arm the central bank to chase the recalcitrant banks out of the system.
Such an action will discourage new entrants who intend to take advantage of the system to make money illegally. GB
