Bank of Ghana set to strengthen SDI sector

The Bank of Ghana  (BoG) is set to strengthen the Specialized Deposit-Taking Institutions (SDI) sector.

Acting Head of the Banking Supervision of the BoG, Mr Ismail Adam, highlighted that the SDIs play a major role in the financial space of Ghana’s economy, hence the decision to strengthen the sector, especially the governance structure.

He told journalists in Accra on Friday, April 4 that “The Bank of Ghana has seen the importance of industry-led consultation for industry-led mergers, which is intended to reshape that space, i.e the SDI sector.

“So the key message there is that we are looking at how to bring in equity from strategic investors. As I said, there are some strategic investors talking to some of these SDIs, and also how to revamp their governance structure such that we have proper governance structure arrangements around their operations.”

Mr Ismail Adam further indicated that the central bank is focused on the mission drift of the SDIs to ensure that they carry out the activities for which they have been licensed to do.

“The other issue is how to deal with the mission drift, ie. SDIs are doing things that were not originally the intended activity for that space. So with all these, we are working closely with the Ministry of Finance, as a matter of fact, a consultant was engaged, he did some drafts, Bank of Ghana also constituted an internal committee to do some work on that arrangement.

“So the way forward is to pull these two works that have been done by the consultant that was engaged by the  Ministry of Finance together with the work that was done by the internal committee of the Bank of Ghana.  The idea of all these is to make sure that that space of the market is revamped to serve that space of the market, people who or hitherto would have been excluded from the financial space but with the intervention of these  SDIs are brought onto the financial space both in terms of credit delivery as well as deposit mobilsation,” he said.

Prior to Mr Ismail Adam’s engagement with the media, the Governor of the Bank of Ghana, Dr Johnson Asiama, had said that the BoG was in talks with the Ministry of Finance to ensure the sector is cleaned up.

Answering questions during the 123rd Monetary Policy Committee (MPC) press conference in Accra on Friday March 28, Dr Asiama said “You asked about the SDIs sector, yes, there has to be a cleanup of that sector, and we are engaging the Ministry of Finance, we are having some talks with the Ministry and we will work on that.”

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The regulated financial institutions had till July 1, 2025, to comply with the directive or face an administrative penalty of one thousand penalty units, equivalent to GH?12,000.

The move by the Bank of Ghana emphasizes its commitment to ensuring that Ghana’s financial sector remains robust and adheres to stringent governance standards following the increasing tendency of banks and specialised deposit-taking institutions (SDIs), to outsource activities to reduce costs and improve efficiency.

The directive details specific functions that regulated financial institutions (RFIs) may outsource with prior approval and lists essential functions that are prohibited from being outsourced to maintain the integrity and independence of key decision-making roles.

For instance, a regulated financial institution shall not outsource to a Service Provider (strategic functions) including but not limited to Board and Senior Management functions such as strategic oversight, corporate planning, organization, management and control and decision-making functions, decisions on whether or not to grant credit, determining compliance with Anti-Money Laundering and Combating of Financing of Terrorism and Know Your Customer (KYC) norms for opening accounts.

Others include the internal audit function, risk management function, and cyber and information security management function.

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