The Bank of Ghana has introduced a guideline for the regulation and supervision of Non-Interest Banking (NIB) to solicit comments and inputs from the banking industry and the public, in line with the Bank of Ghana’s procedures for issuance of directives, 2020.

According to the Central Bank, the regulation and supervision of Non-Interest Banking will contribute strategically to the growth of the real sector of the economy, deepen financial inclusion, promote the realisation of the Sustainable Development Goals, and create new banking and finance jobs.

These, it said, align with the Central Bank’s objective of price stability, financial stability and economic development.

The objective of this guideline is to provide minimum standards for the operationalisation of NIBIs to complement conventional banking.

In terms of the scope and applicability, the Central Bank said all institutions seeking to operate under the NIB model are required to transact banking business, engage in trading, investment and commercial activities as well as provide financial products and services as well as contracts in accordance with established NIB principles.

This guideline is applicable to all Regulated Financial Institutions (RFIs) licensed under this model. These includes banks, specialised deposit taking institutions, financial holding companies, affiliates of banks and development finance institutions, rural and community banks and microfinance institutions.

For application for a licence, the Central Bank said an application for a NIB licence shall be made in writing to the Governor of the Bank of Ghana.

The application shall indicate the type of NIB licence being applied for (full-fledged or window). The application shall be accompanied by the documentation specified by the Bank.

Minimum Paid-Up Capital and Fees

The guideline said pursuant to its regulatory authority, the Central Bank shall determine and specify, through official notice, the requisite minimum paid-up capital and application fees for all Non-Interest Financial Institutions.

In the case of foreign ownership of a NIBI, not less than 60% of the required capitalisation or contribution shall be brought into Ghana in convertible currency.

The capital shall also be invested in non-interest compliant instruments.

Provisional Approval

The Central Bank said it may issue provisional approval to an applicant institution on such terms and conditions as it may consider necessary and appropriate, if it is satisfied that the applicant would carry on the business with integrity, prudence and the required professional competence, amongst others.

Pre-operating Conditions

The Central Banks said an approved applicant shall not commence business until they have obtained a final licence from the Bank.

It added that the Bank shall not issue a licence to an applicant unless it is satisfied that the feasibility report submitted by the applicant is based on sound analysis under reasonable assumptions and includes the specific Non-interest Banking products intended, a business plan and financial projections for the first five years.