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BoG to sanction banks which fail to implement new base formula
 
Posted on: 12-Jun-2013         Source: citifmonline.com
 
 
 
The Bank of Ghana (BoG) has warned it will sanction any bank which fails to implement the new base formula.

All banks are expected to implement the Base Rate formula with effect from the 2nd of July, 2013.

In February last year, the central bank, in collaboration with the Ghana Association of Bankers and the Association of Ghana Industries, agreed on a standardized basis for base rate computation.

Among other things, the new base rate computation is aimed at promoting transparency in lending rates of banks and also facilitating better assessment of monetary policy transmission.

The new base formula will also based on four modules cost of funds, return on equity, provision for bad debt and risk premium.

Average base rate among universal banks in Ghana is 22%, with the minimum rate being 12% and the maximum rate 27%.

Governor for the Bank of Ghana Dr. Henry Kofi Wampah says the Central Bank will ensure that the banks comply with the new formula.