Banking Law In Ghana

The name bank is derived from the Italian word banco meaning "desk/bench", used during the Renaissance by Florentine bankers (Nakamura et al, 1998) However, there are traces of banking activity even in ancient times .In fact, the word traces its origins back to the Ancient Roman Empire, where money lenders would set up their stalls in the middle of enclosed courtyards on a long bench called a bancu, from which the words banco and bank are derived. As a money changer, the merchant at the bancu did not so much invest money as merely convert the foreign currency into the only legal tender in Rome, that of the Imperial Mint. A banker or bank is a financial institution whose primary activity is to act as a payment agent for customers to borrow

By the late 1980s, the banks had suffered substantial losses from a number of bad loans in their portfolios. In addition, the depreciation of the cedi had raised the banks’ external liabilities. In order to strengthen the banking sector, the government in 1988 initiated comprehensive reforms. In particular, the amended banking law of August 1989 required banks to maintain a minimum capital base equivalent to 6 percent of net-assets adjusted for risk and to establish uniform accounting and auditing standards (Anin,

These measures strengthened the Central Bank’s supervision, improved the regulatory framework, and gradually improved resource mobilization and credit allocation. Other efforts were made to ease the accumulated burden of bad loans on the books of banks in the late 1980s. In 1989 the Bank of Ghana issued temporary promissory notes to replace non-performing loans and other government-guaranteed obligations to state-owned enterprises as of the end of 1988 and on private-sector loans in 1989. The latter were then replaced by interest-bearing bonds from the Bank of Ghana or were offset against debts to the bank. Effectively, the government stepped in and repaid the loans. By late 1989, some ¢62 billion worth of non-performing assets had been offset or replaced by Central Bank bonds totaling ¢47 billion. (Anin, 2000)

In the early 1990s, the banking system included the Central Bank (Bank of Ghana), three large commercial banks (Ghana Commercial Bank, Barclays Bank of Ghana, and Standard Chartered Bank of Ghana), and seven secondary banks. Three merchant banks specialized in corporate finance, advisory services, and money and capital market activities: Merchant Bank, Ecobank and Continental Acceptances; the latter two were both established in 1990.(Ghana banking survey