Non-interest banking: BoG sets 60% convertible currency capital for foreign banks

The Bank of Ghana has moved to tighten regulatory oversight of the proposed non-interest banking with a new set of prudential rules.

Under a draft guideline published for consultation, foreign-owned non-interest banking operators will be required to inject at least 60 percent of their minimum capital in convertible foreign currency and deploy it strictly into Shariah-compliant financial instruments.

For the first time, foreign-owned non-interest banks and specialised deposit-taking institutions will be required to meet a higher quality of capital – at least 60 percent of their minimum paid-up capital must be provided in convertible foreign currency.

And this capital must be deployed exclusively into approved non-interest, Shariah-compliant financial instruments.

The Central Bank says this approach is to ensure stability, guard against currency and liquidity risks, and strengthen the resilience of operators within an industry that continues to attract new entrants.

Under the framework, the Bank of Ghana will publish minimum capital thresholds and application fees for all categories of Non-Interest Financial Institutions ranging from development finance institutions and micro-finance companies to rural banks.

Final licences will only be issued after institutions settle the required licensing fees, and all operators will pay annual supervisory fees by January 31.

The BoG will also reserve the discretion to impose additional capital buffers where necessary.

The guideline, anchored in Act 930 and Act 1032, mandates that all non-interest operators conduct their financial, investment, trading, and commercial activities strictly in line with recognised non-interest financial principles.

It also outlines governance standards, permissible financing contracts, and the operational framework for the Non-Interest Financial Advisory Council and the Non-Interest Banking Advisory Committee.