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BANK OF GHANA
NOTICE TO BANKS AND SPECIALISED DEPOSIT-TAKING
INSTITUTIONS (SDIs)
NOTICE NO. BG/GOV/SEC/2021/12
ABOLITION OF UNFAIR FEES, CHARGES AND OTHER
PRACTICES IN THE BANKING SECTOR

The Bank of Ghana has observed with concern, a trend where some Banks
and Specialized Deposit-Taking Institutions (SDIs) impose certain fees and
charges on customers. These practices are deemed to be unfair,
inappropriate and detrimental to the financial inclusion agenda and the
protection of customers’ interest.
In line with the mandate of the Bank of Ghana to deal with unlawful or
improper practices of banks and SDIs under Section 3 of the Banks and
Specialised Deposit-Taking Institutions Act, 2016 (Act 930) and to
ensure that the interest of customers of banks and SDIs are adequately
protected, the Bank of Ghana hereby notifies banks and Specialised
Deposit-Taking Institutions of the abolition of the following practices:

1. Credit Insurance Premium Overcharges
   As part of credit underwriting policies, a number of banks and SDIs
   require borrowers to hold credit insurance against eventualities such
   as death, permanent disability and termination of employment.
   While the Bank of Ghana acknowledges the importance of this
   practice as a loss mitigating norm in credit management, a number
   of banks and SDIs take advantage, to overprice the premiums
   charged to customers, resulting in the increased cost of borrowing.
   Banks and SDIs are directed to desist from premium overcharges
   and to adhere strictly to the following:
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   i. Banks and SDIs that opt to use their pre-determined insurance
   companies to underwrite borrowers’ loans, shall apply the same
   premium charged by the underwriting company to borrowers.
   ii. Banks and SDIs are not permitted to retain insurance premiums
   collected from customers with the intention of implementing an
   internal insurance policy.
   This excludes commissions for Bancassurance arrangements.
2. Maintenance Fees on Savings Account
   The application of “Account Maintenance Fees” by banks and SDIs
   on savings accounts inhibits deposit mobilisation and discourages
   the use of banking systems by the general public. Bank of Ghana
   has noted that the application of such fees has driven a number of
   savings accounts into debit and in so doing, eroded the deposits of
   vulnerable depositors who would generally expect their savings
   accounts to earn interest.
   This practice is detrimental to financial inclusion and negates the
   gains of the financial literacy programmes geared towards promoting
   personal savings.
   Banks and SDIs are directed to desist from charging “Account
   Maintenance Fees” on savings accounts. This ban however, does
   not include charges for services provided by banks and SDIs with
   the explicit prior subscription by customers.
3. Over the Counter (OTC) Withdrawal Charges
   Bank of Ghana notes that some banks and SDIs impose penal
   charges on customers who withdraw their own funds from banking
   halls of affected banks and SDIs. The reason commonly attributed to
   this practice is to encourage customers to use digital platforms
   provided by the banks/SDIs for such withdrawals, in order to
   decongest banking halls. These digital platforms are however not
   offered for free.
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   While Bank of Ghana acknowledges the support of banks and SDIs
   in the digitization agenda, this action deters some customers,
   especially those who are averse to the use of digital platforms, from
   opening and operating accounts. The practice also negatively affects
   the financial inclusion drive of the Bank of Ghana.
   Banks and SDIs are directed to desist from levying penalties on
   customers who withdraw own funds below certain thresholds
   from the banking halls.
   In addition, banks and SDIs shall not levy penalties against
   customers who request account balances within banking halls.
4. Change of Ownership of Collateral Documents
   Bank of Ghana notes that some banks and SDIs require borrowers
   who secure credit facilities with movable assets, to transfer
   ownership of such assets into the joint names of the borrower and
   the bank or SDI involved. In addition, borrowers are made to bear
   the cost associated with the transfer prior to loan approval and after
   settlement of loan.
   This practice of some banks and SDIs is contrary to section 7 of the
   Borrowers and Lenders Act, 2020 (Act 1052) which does not
   permit a security interest to operate as a transfer of title from a
   borrower to a lender. The practice further denies borrowers the
   opportunity to secure multiple loans with a single collateral duly
   registered in the name of the respective borrowers.
   Banks and SDIs are barred from engaging in the practice of
   changing ownership of collaterals presented by borrowers to
   secure credit facilities from the borrower to the bank or SDI.
5. Application of interest on Penal Charges
   The Bank of Ghana has observed a practice among some banks and
   SDIs, where penal interest rates levied against defaulting loan
   customers, are made to accrue interest. In effect, interest is
   computed on penal charges in addition to interest on the outstanding
   loan amount.
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   This practice results in high outstanding loan balances which
   customers are unable to pay, resulting in high non-performing loans.
   The practice is detrimental to the credit market. Banks and SDIs
   are directed to desist from the application of interest on penal
   charges.
   Additionally, penal charges shall only be applied on the amount
   of the delayed interest or principal payment and not on the total
   outstanding loan amount in accordance with section 55(3) of the
   Borrowers and Lenders Act, 2020 (Act 1052).
6. Quotation of Monthly Interest Rates on Credit Facilities
   In accordance with section 55 (2) of the Borrowers and Lenders Act,
   2020 (Act 1052), banks and SDIs shall impose on a borrower an
   interest rate that is calculated on an Annual Basis only in all credit
   agreements.
   Consequently, banks and SDIs are directed to desist from the
   quotation of monthly interest rates on all credit facilities and
   associated fees.
   In addition to the interest rate, banks and SDIs are directed to
   disclose the Annualized Percentage Rate (APR) related to every credit
   facility in accordance with the Disclosure and Product Transparency
   Rules for Credit Products and Services.
7. Third Party Deposit/Withdrawal Violations
   Bank of Ghana has observed with concern, the lack of compliance
   with the requirement of banks and SDIs to obtain full personal
   details (name, address, ID and telephone numbers) of a person who
   makes a deposit into or withdrawal from an account on behalf of
   another person.
   Deposit slips of some banks and SDIs do not make provision for
   depositors’ signatures. This anomaly makes it possible for third
   parties to deposit into customer’s account under the guise that the
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   deposit was made by the customer, by simply writing “self” in the
   column for depositor’s name.
   Banks and SDIs are therefore directed to desist from this
   practice. Banks and SDIs shall ensure that depositors sign on
   deposit slips at all times.
   (SGD)
   SANDRA THOMPSON (MS) 17th June, 2021
   THE SECRETARY