A finance professor at Andrews University in the United States, Prof. William Peprah, has thrown his support for the Bank of Ghana’s (BoG) latest tough measures to curb the issuance of dud cheques in the country.
The menace, known in local parlance as “bounced” cheques, has become a threat to the integrity of the country’s financial system.
Amid the new directives of the Central Bank, the finance professor is applauding the move; however, he wants more clarity on what happens to banks that fail to enforce the rules.
Prof. Peprah says the move is long overdue, stressing that the habit of issuing cheques without sufficient funds is not just a bad financial practice, it’s a danger to the entire banking system.
“So the more dud cheques are issued, it weakens your financial institutions. There is research pointing to the fact that developed countries are developed because of their financial sector. So, as a developing country hoping to be developed, if we allow individuals to issue bounced cheque, it is going to destroy the entire financial system. We don’t want to let this become a systemic effect. So I’m sure the strong sanctions the Bank of Ghana has issued will solve it once and for all,” he remarked in an interview monitored by The High Street Journal.
The Bank of Ghana recently announced stiff penalties for individuals and businesses that issue dud cheques, including monetary sanctions of 10%, 15%, and 20%, depending on the number of offences.
Prof. Peprah clarifies that these charges are not fees for banks to profit from; they’re levies payable directly to the central bank.
He, however, believes there’s one missing piece of accountability for the banks themselves. He believes the directive should have been clear on the stiff and strict punishment to be faced by banks that fail to comply with the directives.
“What I probably will want to see is if the Bank of Ghana will come out further and say if a bank fails to report, what sanction must be applied to that bank, which I couldn’t read that one from it. Probably, they must even pay more for that. And that’s something that will really help to solve this issue,” he noted.
To him, Ghana’s financial sector must be built on trust and responsibility. The country can’t build a developed economy on a weak financial foundation. He is optimistic that if this directive is strictly followed and enforced, it will restore discipline and confidence in our financial system once and for all.
