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Central Bank Governor Dr Abdul Nasir Issahaku has raised concern about the alarming incidence of electronic fraud in the banking industry.

According to him, electronic fraud currently constituted more than 80 percent of all complaints and fraud cases that the Bank of Ghana (BoG) received from the banking industry.

Speaking at the Annual General Meeting (AGM) of the Ghana Association of Bankers (GAB) in Accra yesterday, he said though the world was moving to electronic banking, the associated risk could be enormous.

“I wish to urge banks to step up their risk assessment to curtail the surge. As I have emphasized earlier, this trend could cause reputational damage not only to banks but may have systemic implications that could even lead to blacklisting of the country by FATF, the International Anti Money Laundering and Combatting the Financing of Terrorism (AMLCFT) body.”

Not quite long ago, Ghana was blacklisted for money laundering and it took a lot of hard work to overcome that challenge.

He advised banks to invest more to educate users of online banking and conduct proper security assessments of banking apps and tools before integrating them into their core operating systems.

“To reduce the risk further would require a much wider and more coordinated effort among banks, payment networks, regulators and governments to strengthen security, especially among the weakest links in our financial infrastructure. When it comes to electric fraud what we need as an industry is cooperation and not competition.”

Legacy debt

Commenting on the restructuring of the VRA and TOR’s debt, Dr Issahaku said total industry exposure to the VRA stood at GH¢2.2 billion out of which, under the restructuring agreement, an upfront of GH¢250 million had been made to the lender banks on pro rata basis.

“The remaining exposure has been restructured over a period of five years with quarterly principal and interest payments. The debt restructuring of the cedi and US dollar denominated VRA legacy debts will be repaid from an account opened for the proceeds accruing under the Power Generation and Infrastructure Support sub-account, under the Energy Sector Levies Act (ESLA, 2015).

“An estimated 50 percent proceeds would be used to retire the VRA legacy debts.

The other 50 percent of proceeds under the ESLA plus the current enhanced internally generated funds of VRA will all be escrowed into a centrally managed account to be used to service trade and other creditors of the power sector.”

In respect of the industry exposure to TOR, he said a long-term agreement had been executed between all parties to restructure the legacy debt of TOR over a ten (10) year period commencing September 30, 2016.

As part of the arrangement, TOR would pay an initial investment amount of GH¢150 million to the lenders and this would be invested over a 10-year period at a rate of 20 percent annum. The initial investment amount will cater for the principal repayment whilst interest payment would come from the Energy Sector and TOR’s own internally generated funds which would be transferred into the TOR/MOFEP Crude Oil Repayment Account.

More capital injection

The governor advised banks to inject more capital to enable them become strong and resilient and position them to take on big ticket deals both locally and internationally.

The Asset Quality Review undertaken on the loans and investments portfolio of banks in Ghana by some accounting firms on behalf of the Bank of Ghana in the first half of the year also points to the need for injection of additional capital by banks.

“If we want to grow at an accelerated pace in order to reduce poverty and advance economically, then we need to build the capacity for embarking on bigger projects with sound capital base to absorb shocks without losing momentum.

In view of this, a technical committee has been set up within the Bank of Ghana to review and recommend an appropriate level of minimum regulatory capital for banks in Ghana. The new capital level and the modalities for meeting same by existing banks would soon be announced.”

Alhassan Andani, president of GAB, assured the governor of the association’s commitment in collaborating with the Central Bank to improve operations of players in the banking industry.