Don’t be surprised if your favorite local bank rejects your dollar and other foreign currencies (FX) deposits intend to make for safe keeping, investment or even to perform an international transaction.
The reason for rejection can be attributed to Bank of Ghana’s recent announced decision at the just ended Monetary Policy(MPC) Committee meeting by the central bank to implement a uniform rate of 20% Reserve Cash Ratio (CRR) on all local and FX deposits.
Cash Reserve Ratio is the percentage of customer deposits that commercial banks are required to keep with the central bank, in this case the Bank of Ghana.
From new policy direction, 20% of every FX deposit from customers, business etc to any bank must be held at the Bank of Ghana making only 80% available for the banks to trade and do business with.
The new policy has triggered concerns within Ghana’s banking sector that some banks may begin limiting or outright rejecting new dollar deposits following new reserve requirement guidelines introduced by the Bank of Ghana (BoG).
The issue has become serious enough for the Ghana Association of Banks (GAB) to reportedly seek an emergency meeting with the BoG Governor over the implementation of the revised Cash Reserve Ratio (CRR) policy, particularly its application to foreign currency (FX) deposits.
Under the new framework, banks are required to hold 20% of customer deposits as reserves at the Bank of Ghana. The reserves are largely unremunerated, meaning banks earn little or no interest on the locked funds.
For FX deposits, the policy means banks must keep 20% of the cedi equivalent of dollar deposits idle at the central bank, reducing the amount available for lending, trade finance, and day-to-day liquidity operations.
Economist and Member of Parliament for Tano North, Gideon Boafo warned in an X post that the policy could significantly affect how banks handle dollar deposits going forward.
“The new policy makes FX deposits expensive for banks to hold,” he wrote.
According to him, banks’ likely response may include “refusing new USD deposits or impose minimums already happening at some banks.”
He further explained that “every $100 you deposit costs them $20 they can’t use,” making dollar deposits increasingly unattractive for banks under the new rules.
Boafo also warned that banks may introduce higher fees on foreign currency accounts to offset the additional costs.
“Charge you fees for holding FX, or reduce interest paid on FX accounts. Practically, ledger fees, dormancy fees, and transaction fees on USD accounts are likely to rise,” he stated.
Industry observers say the development could have broader implications for businesses and individuals who rely on dollar accounts for imports, tuition payments, international transfers, and savings protection against cedi depreciation.
Some banks are also expected to tighten withdrawal and transfer processes for foreign currency transactions.
“Expect longer processing times, lower daily limits, and more documentation for cash withdrawals and transfers,” Boafo noted, adding that banks may act this way “in order to conserve the FX they can actually use.”
