The Bank of Ghana (BoG) has issued a firm reminder to banks, Specialised Deposit-Taking Institutions (SDIs), and the general public regarding the stringent criteria for holding key positions within Regulated Financial Institutions (RFIs).
The reminder specifically underscores that individuals implicated in the 2017-2019 financial sector clean-up, as well as former directors of failed banks and SDIs since the enactment of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), are ineligible to hold significant roles under the “fit and proper person” criteria.
In a recent notice, the BoG highlighted the importance of maintaining the gains achieved through the financial sector clean-up, which was necessitated by poor corporate governance and imprudent risk-taking that led to the collapse of several RFIs.
To address these issues, the BoG introduced the Corporate Governance Directive in 2018 and the Fit and Proper Persons Directive in 2019, aimed at reinforcing sound corporate governance practices and entrenching the central bank’s gatekeeping role.
To further bolster governance disclosure practices, the BoG issued the Corporate Governance Disclosure Directive in 2022, aligning with Pillar III of the Basel Capital Accord, which relates to regulatory and public disclosures. These measures are designed to ensure transparency and accountability within the financial sector.
The BoG’s notice reiterated that significant stakeholders, directors, and key management personnel must always possess good repute and demonstrate sufficient knowledge, skills, and experience to fulfill their duties in accordance with the Fit and Proper Persons Directive, 2019.
The directive sets forth rigorous standards, including assessing whether a person has previously been a director or involved in the management of any institution that:
- Had its license revoked,
- Has been or is being wound up by a competent court or authority, within or outside Ghana,
- Has gone into receivership, insolvency, or involuntary liquidation.
The central bank emphasized the importance of these standards in safeguarding the integrity and stability of Ghana’s financial sector.
By enforcing these criteria, the BoG aims to promote the safety and soundness of RFIs, ensuring that only individuals of high ethical and professional standards are entrusted with leadership roles.
The BoG’s notice serves as a crucial reminder to all stakeholders to adhere to these directives and ensure that the financial sector remains robust and resilient.
Banks, SDIs, and the general public are encouraged to take note of these regulations to maintain the trust and confidence of depositors and investors.