BOG Issues the Capital Requirements Directive Under Basel II
The Bank of Ghana (BOG) published the Capital Requirements Directive (CRD) under Section 92(1) of the Banks and Specialized Deposit-taking Institutions Act 2016 (the BSDI Act) and under Section 4(d) of the Bank of Ghana Act 2002. CRD shall apply to banks licensed and operating under the BSDI Act. The Directive shall be implemented from July 01, 2018. Banks must comply with the CRD by January 01, 2019.
The CRD consists of four parts: Definition of Regulatory Capital (Part 1), Management and Measurement of Credit Risk with three sub-sections (Part 2), Management and Measurement of Operational Risk (Part 3), and Management and Measurement of Market Risk (Part 4). The CRD sets the requirement by which banks will calculate the capital adequacy ratio (CAR) under the BSDI Act. The risk-based CAR shall be calculated on a standalone and a consolidated basis. CRD requires banks to hold appropriate capital commensurate for unexpected losses that may arise from business through capital transactions, credit, operational, and market risks. Section 29(1) of the BSDI Act mandates the Bank of Ghana (BOG) to prescribe a risk-based capital adequacy requirement, which will be measured as a percentage of the capital of the bank to the risks of its assets.
BOG has power to increase CAR for any bank not operating to minimum risk standards. Any bank operating outside the minimum standards in regard to its risk-based capital requirement, eligible regulatory capital, risk exposures, or operating practices must notify BOG and take immediate action to rectify and strengthen its business within a set time acceptable to BOG and/or be subjected to penalty.
Related Link: Capital Requirements Directive
Effective Date: July 01, 2018
Keywords: Middle East and Africa, Ghana, Banking, CRD, Market Risk, Credit Risk, Operational Risk, Regulatory Capital, BOG
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous Article
ESMA Publishes Risk Dashboard for the First Quarter of 2018Related Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.