Amidst growing agitations among some foreign currency account holders over the exorbitant increase in maintenance charges, banking and financial analyst, Dr. Richmond Atuahene argues that the blame should not fall on the banks.
Some affected customers have taken to social media to express their frustrations over the development blaming the banks for the charges. These frustrated customers cannot fathom why the banks are charging as high as GHC 500, ($10, and $20) among others for monthly account maintenance.
But Dr. Atuahene who has years of experience in banking and finance issues in an exclusive interview with The High Street Journal says the current development is a result of the persistent cedi depreciation and the Bank of Ghana’s current cash reserve ratio (CRR).
The banks, Dr. Atuahene explains are mandated to keep a percentage of every foreign account held as reserves at the Central Bank in Ghana cedis. The reserves kept in local currency at the Bank of Ghana are determined by the exchange rate and the percentage of the CRR which is currently around 20%.
The reserves of the foreign account kept at the Bank of Ghana, Dr. Atuahene describes as unremunerated reserves. The banks cannot use such reserves while the Bank of Ghana does not pay interest on them.
“The banks see that it does not help them because they are not monies that you can lend to somebody. Nobody wants to take a dollar loan in Ghana now. Nobody because you cannot pay back. It becomes just like a custodial item to keep it for you.
“So they have realized that if we have to make provisions at Bank of Ghana and then you want to have it free, no, compensate the banks now they charge you $20, $30, and $40 so that by the time you realize they would have been compensated by the charges on the customer,” he explained.
The banking and finance analyst is also convinced that the decision by the banks to increase maintenance charges makes economic and business sense. This is because the banks must be compensated for their reserves kept at the Bank of Ghana which are not earning any income.
He further explains that banks charging high maintenance costs “is prudent banking especially when the Bank of Ghana increased the capital reserves. Currently, the minimum is 20%. Some are doing 25%. Some are doing 30%.
“Let’s assume you have too much foreign currency and you are allowed to put 20% at the Bank of Ghana where you cannot use it, you cannot lend it and when they take that money they don’t also pay interest. It is called unremunerated reserves. They don’t pay anything for the 20% they have taken.”
With this, Dr. Atuahene does not believe the rising charges are driven by greed or exploitation by the banks but by the need to be compensated for the lack of profitability on their monies held as foreign currency reserves through the CRR which is a monetary policy.
According to him, if customers are dissatisfied with the fees, their only alternative would be to withdraw the funds and store them outside the banking system, although doing that would be impractical and risky.
This worrying development causing agitations among the affected customers Dr. Atuahene believes can be attributed to the weak economic fundamentals of the economy which is manifesting in the cedi depreciation, increased CRR, and high bank charges.
