The Governor of the Bank of Ghana, Dr Johnson Asiama, has revealed that the central bank is committed to reviewing the current Cash Reserve Ratio (CRR) for commercial banks in the country.

However, he emphasised that “this review should be done gradually” to prevent economic disruptions.

Dr Asiama acknowledged the impact of the CRR on commercial banks, stating, “We recognise the impact of the Cash Reserve Ratio for commercial banks and intend to review it critically.”

He assured that “any adjustments must be phased to avoid unintended economic consequences.” His comments came in response to an appeal from the Governing Council of the Ghana Association of Banks (GAB) during a meeting to discuss industry challenges.

The meeting, requested by GAB members, aimed to foster an open dialogue between banks and regulator to build trust and consensus on key financial policies.

Background on Cash Reserve Ratio adjustment

Bank of Ghana in 2024 introduced a new Cash Reserve Ratio (CRR) regime that links CRR requirements to loans-to-deposit ratios (LDRs).

The action was part of efforts to mope up what the regulator described as excess liquidity.

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%

During the meeting, commercial banks appealed to the central bank to review the CRR, arguing that it limited financial intermediation and increased banking costs.

The discussion also covered Ghana’s credit rating challenges and their impact on correspondent banking relationships. GAB members called for an upward revision of Nostro and affiliate exposure limits to ease constraints on international transactions.

In response, Dr Asiama acknowledged banks' practical difficulties in securing new correspondent banking relationships and committed to further assessing the situation.

Regulation of Foreign Exchange and Money Transfer Operators

The Governing Council of the Ghana Association of Banks urged the Bank of Ghana to end the mandatory sale of foreign exchange proceeds from mining and oil companies to the central bank.

They argued that allowing these proceeds to flow through the banking system would improve foreign exchange price discovery. Dr Asiama assured them of his commitment to further engagement on this request.

Additionally, the Governor stated that the Bank of Ghana is working to review the operations of Money Transfer Operators (MTOs) and urged commercial banks to cooperate in streamlining the sector for greater transparency.

He highlighted the growing influence of MTOs and fintech companies in the remittance business and addressed concerns about regulatory gaps that could lead to foreign exchange losses for the country.

Special Dispensation for Commercial Banks and Agricultural Financing

Dr Asiama also revealed that the central bank is committed to extending the special dispensation granted to commercial banks during the Domestic Debt Exchange Programme (DDEP).

This response came after banks raised concerns over the expiration of the special dispensation on restructured cocoa bonds under the DDEP, which is set to end in April 2025. Banks expressed fears that market illiquidity and COCOBOD’s financial position might make it difficult to sell these bonds.

On the issue of rising non-performing loans, Dr Asiama emphasised the role of fiscal policy in reducing inflation and interest rates.

He reaffirmed the Bank of Ghana’s commitment to doubling agricultural financing and supporting the Ghana Incentive-Based Risk-Sharing System for Agricultural Lending (GIRSAL) in raising additional guarantee funds.

However, he also urged commercial banks to take the lead in stakeholder engagements to improve and de-risk selected agricultural value chains.