Bank of Ghana demands banks to seek approval before payment of dividends – The Bank of Ghana (BoG) has asked banks and Specialised Deposit-Taking Institutions (SDIs) to seek its approval in writing before the declaration and payment of dividends.
The move is to prevent banks from using funds from the reduction in the Bank’s reserve requirements and the
The BoG, as part of efforts to combat the economic impact of the coronavirus, cut its benchmark interest rate by 150 points, announced a reduction in the Banks’ reserve requirements to eight percent from 10 percent and also lowered the conservation buffer to 1.5 percent from three per cent, which effectively cut the capital-adequacy ratio to 11.5 percent from 13 percent.
“Banks and specialized deposit taking institutions are to refrain from declaring and paying dividends or making other distributions to shareholders for the 2019 financial year unless the Bank of Ghana is satisfied that the institution is not relying on the additional liquidity released by the policy measures” the BoG said in a statement.
It also asked the banks to comply and not to use liquidity gained from the eased capital rules to buy government securities and warned that failure could lead to sanctions.
“The Bank of Ghana shall monitor banks and SDIs’ financial dealings on a weekly basis, to ensure full compliance with the above directives. Failure to comply with this Notice shall attract sanctions in accordance with the relevant provisions of the Bank and Specialised Deposit-Taking Institutions Act,” it added.