The Governor of the Bank of Ghana, Dr. Ernest Addison, has announced another increase in the Cash Reserve Ratio (CRR) of commercial banks.

According to him, this should help address the excess liquidity the banks are holding.

Announcing it today, the Governor said banks with Loan to Deposit ratio above 55% will have to meet a CRR of 15%, banks with Loan to Deposit ratio between 40% and 55% will have to meet CRR of 20%, banks with Loan to Deposit ratios below 40% will be required to hold CRR of 25%.

These policy measures, he said, will become effective in April 2024.

Meanwhile, the banking sector’s performance has rebounded after the implementation of the Domestic Debt Exchange Programme (DDEP).

In the first two months of 2024, the total assets of the banks increased by 21.0%, while total deposits and advances rose by 25.5% and 1.8%, respectively.

Trends in key financial soundness indicators were mixed.

The Capital Adequacy Ratio, adjusted for reliefs, was 13.6% in February 2024, above the regulatory minimum threshold of 13.0%, compared with 12.6% in February 2023. Liquidity and profitability ratios also improved compared to a year earlier.

The non-performing loan ratio, on the other hand, increased to 24.6%, reflecting the downgrading of several large exposures to the banks. NPLs, excluding the loss category, however, remained in single digits at 9.8%.