Commercial banks have assured that they will move quickly to reduce interest rates if the Bank of Ghana (BoG) reviews the Cash Reserve Ratio (CRR) for banks in the country.

The banks have also promised to take measures to improve lending to businesses.

This is due to the fact that the regulatory measure has impacted on their liquidity and loan book.  

The Managing Director and Chief Executive of First Bank, Ghana Victor Yaw Asante disclosed this on PM EXPRESS BUSINESS EDITION on February 27, 2025 with host George Wiafe.

Background

The BoG in 2024 introduced a new CRR regime that links the CRR requirements to loans-to-deposit ratios (LDRs).

The action was part of efforts to mop up excess liquidity in the banking sector.

The new regime includes:

* 25% CRR for banks with LDRs below 40%

* 20% CRR for banks with LDRs between 40% and 55%

* 15% CRR for banks with LDRs above 55%

CRR and Lending

Speaking on the programme, Mr. Asante revealed that if the Bank of Ghana is able to heed to the request, it will go a long way to improve the operations of banks.

 “We have made some passionate appeal to the Bank of Ghana and hopeful that could be addressed soon”, he added.

Cedi’s performance and Treasury bill auctions

The cedi has been fairly stable against the US dollar over the past months.

Mr. Asante called for measures that would improve the country export earnings to increase Ghana’s reserves.

He appealed to the BoG to use interventions and strategic measures to address the foreign exchange challenges without directly interfering in the market.

“We should also try and deal with expectations as well as manage things in a way that build trust”, Director noted

On recent limit in demand for dollars, Mr. Asante, revealed that the situation could be linked to improve supply of foreign exchange on the market.

On treasury bills auction and participation of commercial banks, Mr. Asante argued that the development should be seen as a demand and supply situation.

According to him, the reduction in treasury bills rate could also impact on cost of credit and lending rate if the trend is sustained.