…..As Country’s Central Bank Finally Issues Guidelines
Report: Mohammed A. Abu
Ghana’s Central Bank (Bank of Ghana) has finally issued its Guidelines for the Regulation and Supervision of Non-Interest Banking 2025, bringing to an end, the decades long much expected introduction of the globally most patronized alternative financing model into the country’s financial system.
The introduction of Non-interest banking came out as one of the key policy recommendations during last year’s National Economic Forum which tended to have stimulated the pursuit of a series of pragmatic action measures by the Bank of Ghana (BOG) culminating into the issuance of a draft Guidelines document.
Non-Interest Banking and BOG’s Objectives
The introduction of Non-Interest Banking (NIB) is consistent with the BOG’s objective to promote financial inclusion, diversify financial products and services and enhance financial stability.
This comes on the back of decade’s long series of efforts towards the integration of non-interest banking into Ghana’s financial system. Over a decade back the country’s nearly witnessed the takeoff of her first ever non-Interest bank but it didn’t materialize due to some challenges at the time. The passing of the Banks and Specialized-Deposit Institutions Act, 2016(Act 992) that had in part made provision for non-interest banking was a demonstration of the country’s commitment and resolve.
Indeed non-interest banking and finance has been time tested and proven in both emerging markets and advance world non-Muslim countries with particular reference to the UK,Germany,Luxembourg among others, to be a most effective weapon for mobilizing alternative capital for addressing infrastructure financing gaps in public sector as well as meeting the financing needs of the private sector players.
Legal and Institutional Framework
The Guideline is issued pursuant to the provisions of the 1992 Constitution of Ghana, the Companies Act,2019(Act 992),the Banks and Specialized Deposit-Taking Institutions Act,2016(Act 930),Development Financial Institutions Act,2020(Act 1032),the Non-Banking Financial Institutions Act,2008(Act 774) and Anti-Money Laundering Act,2020(Act 1044).
The Critical Areas
The Guidelines covers issues of regulatory and supervisory importance such as, Licensing requirements, Definition of Non-Interest Banking and Financial Institution (NIBI) and NIB products, Corporate Governance Architecture, Naming and Identification of NIBIs, Prudential Requirements, Windows and Branches Establishment, Audit, Accounting and Disclosure Requirements, Anti-Money Laundering (AML) and Combating the Financing of Terrorism.
Cautionary Note to Prospective NIBIs
The BOG cautions prospective Non-Banking and Financial Institutions(NIBIs) against any action that will undermine its goal of promoting of financial inclusion and diversification of financial products and services to enhance financial stability or compromise the credibility,intergrity and sustainability of non-interest banking services in Ghana.
Tax Neutrality Complementary Framework
The document also discloses that BOG is to collaborate with the Ghana Revenue Authority (GRA) and the Ministry of Finance (MOF) to develop and issue a complementary framework to ensure tax neutrality for permissible Non-Interest Banking (NIB) products.
Complementary Guidance on Sukuk and Takaful
To augment liquidity management and risk mitigation, complementary guidance on sukuk (zero interest bond) and Takaful (non-interest insurance) shall be issued by the Securities and Exchange Commission (SEC) and National Insurance Commission (NIC)
Participation in the NIBI industry
“There shall be no discrimination based on faith, ethnicity, gender or any other grounds in the participation of individuals, or institutions as promoters, shareholders, depositors, employees, customers, or other relevant parties in any transaction involving Non-Interest Banking Institutions(NIBIs)”.
“The Bank will continue to pursue its objectives by providing a fair, enabling and non-discriminatory regulatory environment for all NIBIs”
IFRIG’s Appreciations and Commendations
In separate development, the Islamic Finance Research Institute, Ghana (IFRIG) a leading Ghanaian organization engaged in non-interest banking research and advocacy, has expressed its profound appreciation to the Governor of Bank of Ghana, the first Deputy Governor and second Deputy Governor of Ghana, for the successful issuance of the Guidelines for the Regulations and Supervision of Non-Interest Banking and Finance.
IFRIG also extends it commendations to the Head of the Banking Supervision Department of the Bank of Ghana and his entire Team for the technical leadership, diligence and professionalism throughout the development of the Guidelines
The organization also appreciated the Special Advisor to the Governor of Bank of Ghana on Non-Interest Banking and Finance together with his team for their strategic guidance, stakeholder engagement and sustained commitment to ensuring that the framework meets international best practices while remaining responsive to Ghana’s unique socio-economic context.
It also acknowledged with deep gratitude the broad-based national support that made the achievement possible while also thanking the Catholic Bishops Conference, the Christian Council of Ghana, the Pentecostal and Charismatic Churches, the Office of the National Chief Imam,Ahle Sunna Wal Jama’a,the Ahmediyya Muslim Mission, the Shia Community, the National Muslim Conference of Ghana(NMCG),Traditional authorities and other faith-based community leaders for their constructive engagement and support.
