Bank of Ghana Implements Significant Increase in Minimum Capital for Credit Bureaux

In a strategic move to bolster Ghana’s credit reporting system, the Bank of Ghana (BoG) has announced a substantial increase in the minimum paid-up capital for both existing and new Credit Bureaux. Effective November 20, 2023, the minimum capital has been raised from GH¢500,000 to GH¢6 million.

This regulatory adjustment, in accordance with Section 18 (3) of the Credit Reporting Act, 2007 (Act 726), aims to fortify the country’s credit reporting regime. The BoG’s decision underscores the importance of ensuring a well-capitalized investment by credit bureaux, maintaining a robust information technology infrastructure, and delivering effective credit reporting services.

Existing credit bureaux have been granted a grace period until January 2025 to comply with the new minimum capital requirement. This timeline allows for an orderly transition, enabling credit bureaux to make necessary adjustments to meet the revised standard.

The central bank’s statement emphasized that the increased capital requirement is crucial for maintaining a robust information technology infrastructure and systems. This, in turn, contributes to providing effective credit reporting services, ultimately enhancing financial stability within the credit sector.

Non-compliance with the new minimum paid-up capital requirement will be addressed in accordance with Section 11 (1) (e) of the Credit Reporting Act, 2007 (Act 726). Consequences may include the revocation of the credit bureau’s license if it fails to meet the minimum capital requirements.

This regulatory move aligns with the legal framework set out in the Credit Reporting Act, ensuring that credit bureaux operate within established standards. The revision underscores the commitment to transparent credit reporting, sound risk management, and financial stability.

Credit bureaux play a pivotal role in collecting information from financial and non-financial institutions, providing essential consumer credit information. Regulators, including the Bank of Ghana, rely on credit information from bureaux to understand credit risks faced by borrowers and financial institutions, contributing to effective oversight functions.

The BoG’s decision to raise the minimum paid-up capital for Credit Bureaux highlights a commitment to fortifying the credit reporting system and ensuring the stability of the financial sector. Existing credit bureaux now have a reasonable timeline to comply with the new capital requirement, reflecting the central bank’s emphasis on a smooth transition.