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Banking And Financial Services Law In Ghana Flashcards

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1
Q

[T /F] There’s both statutory and judicial definitions of a bank under Ghanaian law

A

False. Only statutory definition

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2
Q

Lord Denning’s definition of a bank in the case of United Domination Trust Ltd. V. Kirkwood.

A

An institution that;

  1. Accepts money and collects cheques for customer’s credit
  2. Honouring cheques and debiting customer’s account and
  3. Keeping accounts for customers in the bank’s books in order to enter the credits of the customer.
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3
Q

Bank, section 156 of Act 930

A

Is a body corporate which engages in the deposit taking business and issued with a license in accordance with the Banks and Specialized Deposit-Taking Institutions Act, 2016 (Act 930)

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4
Q

Specialized Deposit-Taking (SDTI)

A

Is a body corporate which engages in the deposit taking business and it is issued with a license to engage the deposit-taking business in accordance with Act 930.

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5
Q

Financial Holding Company

A

A company that controls a bank or a specialized deposit-taking institution which is subject to registration requirements under Act 930

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6
Q

An affiliate of a company

A

A body corporate of which the company is a subsidiary, a subsidiary of the company, or a body corporate that is under a common control with the company

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7
Q

[T /F] All banks in Ghana are deposit-taking institutions but not all deposit taking institutions are banks

A

True

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8
Q

Permissible activities of banks and SDTI, section 18(1) of Act 930.

A

(a) acceptance of deposits and other repayable funds from the
public;
(b) lending;
(c) financial leasing;
(d) investment in financial securities;
(e) money transmission services;
(f) issuing and administering of means of payment including
credit cards, travellers cheques, bankers’ drafts and electronic
money;
(g) guarantees and commitments;
(h) trading for own account or for account of customers in
(i) money market instruments,
(ii) foreign exchange, or
(iii) transferable securities;
(i) participation in securities issues and provision of services
related to those issues;
(j) advice to undertakings on capital structure, acquisition and
merger of undertaking;
(k) portfolio management and advice;
(l) keeping and administration of securities;
(m) credit reference services;
(n) safe custody of valuables;
(o) electronic banking;
(p) payment and collection services;
(q) bancassurance;
(r) non interest banking services; and
(s) any other services that the Bank of Ghana may determine

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9
Q

[T /F] SDTI is prohibited from engaging in the trade of foreign exchange or offer services denominated in foreign currency. Section 18(2) of Act 930

A

True

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10
Q

Enactments that a bank and SDTI are required to comply with, section 18(3) of Act 930.

A
  1. Securities Industry Act, 1993 (PNDCL 333)
  2. Foreign Exchange Act, 2006 (Act 723)
  3. Credit Reporting Act, 2006 (Act 726)
  4. Insurance Act, 2006 (Act 724)
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11
Q

Credit unions are licensed and supervised by

A

The Non-Bank Financial Institutions (NBFI) Act, 2008 (Act 774)

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12
Q

A credit union

A

Is a body corporate established as a co-operative and not for profit but to provide savings, credit and other financial services to members of that body corporate based on a common bond and linkage of association.

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13
Q

[T/F] Act 930 targets only for-profit business organizations in the financial service industry.

A

True.

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14
Q

[T /F] Banker-customer relationship is controlled by statue and case law

A

True.

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15
Q

What are these cases related to; Great Western Railway Co. Ltd v. London and County Banking Co. & Bank of West Africa v. Appenteng

A

The qualification of a bank customer

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16
Q

Banks services to customer

A
  1. Honouring it’s cheques
  2. Making periodic payments authorized by customer
  3. Collecting payments due to him
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17
Q

Bank customer

A

A person who has a relationship based on a general or specific contract with a bank

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18
Q

Natural persons as customers

A
  1. Individual adults above 18 years
  2. Minors
  3. Agents, eg, trustees, executors, administrators
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19
Q

Unincorporated groups and artificial personalities as customers

A
  1. Clubs
  2. Associations
  3. Churches
  4. Partnerships
  5. Government and government agencies
  6. Public corporations
  7. Liquidators
  8. Schools, universities
  9. NGO
  10. Embassies
  11. Agencies of international organizations in Ghana
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20
Q

Importance of banks to customers

A
  1. Deposit cash
  2. Bank to.make and receive payments and transfers on their behalves
  3. Deposit valuables other than cash
  4. Seeking investment and financial advice
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21
Q

Modern banking services

A
  1. Electronic banking
  2. Investment banking
  3. Financial advisory services
  4. Financial leasing
  5. Credit reference
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22
Q

What case is related to Foley v Hill, Harley v Ejura Farms (Ghana) Ltd, Kwetey V Botchway

A

Deposit taking, debtor-creditor relationship

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23
Q

Enactments affecting lending/borrowing relationships of banks and their customers

A
  1. Credit Reporting Act, 2007 (Act 726)
    The credit bureau can disclose the state of a borrower’s financial affairs to a bank or lender to enable that lender make informed lending decisions
  2. Borrowers and Lending Act 2008 (Act 773)
    An Act to provide the legal framework for credit, to improve standards of disclosure of information by borrowers and lenders, to prohibit certain credit practices, to promote a consistent enforcement framework related to credit, and to provide for related matters
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24
Q

Enactments that regulate payments and money transfer

A
  1. The payment systems act, 2003

2. The bills of exchange act, 1961 (Act 55)

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25
Cases related to payments and money transfer
1. Victoria Island Properties Ltd and ANZ Grindlays Bank Ltd v Standard Chartered Bank (Ghana) Ltd and E. O Effiong 2. Tsegah v Standard Chartered (Ghana) Ltd
26
Article 183 of the 1992 constitution
Recognizes the existence of the Bank of Ghana as the nation's central bank.
27
Bank of Ghana Act, 2002 (Act 612)
This Act seeks to establish the statutory framework for achieving the central bank's constitutional mandate
28
Functions of the BOG
1. Formulation and implementation of monetary policy 2. Promotion, regulation, and supervision of payment systems 3. Maintenance of financial stability through the regulation and supervision of the banking and financial system 4. Currency note issue
29
Key principles in Act 930
1. Licensing requirements 2. Capital and ownership structures 3. Management 4. Risk control measures 5. Permissible and prohibited activities 6. Transparency 7. International best practices and standards
30
Banks and Specialized Deposit-Taking Institutions Act 2016 (Act 930)
To amend and consolidate the laws relating to deposit-taking business, and to provide for related matters
31
Ghana Deposit Protection Act, 2016 (Act 931)
To protect small depositors from loss incurred as a result of the occurrence of an insured event, and also provide a safe and efficient financial system in Gha3by establishing a Deposit Protection Scheme, a Deposit Protection Fund, a Deposit Protection Corporation and related matters.
32
ARB Apex Bank Ltd Regulations, 2006 (L. I. 1825)
To provide special rules for the establishment, operations and supervision of the ARB Apex Bank Ltd. and to confer upon that bank, the power to inspect, regulate and supervise rural and community banks on behalf of the Bank of Ghana
33
Payment Systems Act, 2003 (Act 662)
To provide a statutory framework for the establishment, operations and supervision of electronic and other payment, clearing and settlement systems including related infrastructure as well as for the rights and obligations of the transacting and intermediating parties.
34
Foreign Exchange Act, 2006 (Act 723)
Deregulation in foreign exchange related transactions by providing for the exchange of foreign currency for the international payment transactions and transfers and regulating foreign exchange business
35
The Foreign Exchange Act came to repeal what existing act?
The Exchange Control Act, 1961 (Act 71) which expressly prohibited foreign exchange transactions unless permitted by the Bank of Ghana and or Ministry of Finance
36
Credit Reporting Act, 2007 (Act 726)
To provide a legal and regulatory framework for credit reporting in Ghana, as an essential element in the development and maintenance of an effective financial sector.
37
Borrowers and Lenders Act, 2008 (Act 773)
To improve the protections for lenders and borrowers in order to ensure long-term viability of the credit system.
38
Duties of Act 773
1. Setting rights and obligations of lenders and borrowers in the credit rela3 2. Setting standards of information disclosure by lenders and borrowers, to facilitate transparency 3. Prohibiting certain credit practices 4. Legislating enforcement of collateral regjstry 5. Empowering the Bank of Ghana to regulate, supervise and direct the credit system in accordance with its constitutional mandate.
39
Anti-Money Laundering Act 2007 (Act 749)
To provide the legal framework for detecting preventing and prohibiting money laundering and establishing a Financial Intelligence Center
40
Certain prerequisites before BOG issues a license
1. Feasibility report based on sound analysis based on reasonable assumption 2. Proposed directors and key management personnel must be fit and proper persons 3. Suitable significant shareholders 4. Ownership structure must not hinder supervision 5. Adequate paid up capital and acceptable original sources not including borrowed fund 6. Adequate governance arrangement 7. Not being a shell company 8. Compliance with Act 930, its Regulations, directives, and other legally binding instruments made under Act 930
41
Section 6 of Act 930
Requirement of a license
42
General Principles of bank and SDTI regulations
1. Licensing 2. Supervision 3. Minimum requirements 4. Market discipline
43
[T /F] On Application, the BOG has 10 working days to acknowledge receipt of application and it has six months to communicate its decision in writing to the applicant
True.
44
Section 5 of Act 930
Licensing authority of Bank of Ghana
45
Section 7 of Act 930
Application for licence
46
Section 9 of Act 930
Pre-requisites for a licence
47
Section 8 of Act 930
Types of license
48
Section 10 of Act 930
Provisional approval
49
Section 11 of Act 930
Invitation to public to subscribe to shares
50
Section 12 of Act 930
Final approval and issuance of banking or specialised deposittaking institution licence
51
Section 13 of Act 930
Non transferability or assignment of licence
52
Section 14 of Act 930
Conditions for issuance of license
53
Section 15 of Act 930
Refusal of licence
54
Section 16 of Act 930
Revocation of license
55
Section 17 of Act 930
Central Register
56
Section 18 of Act 930
Permissible activities
57
Section 19 of Act 930
Restrictions on commercial, agricultural or industrial activities and immovable property
58
Section 20 of Act 930
Powers regarding unauthorised deposit-taking business
59
Section 21 of Act 930
Repayment of moneys by unauthorised persons
60
Section 22 of Act 930
Penalties for unauthorised deposit-taking business
61
Section 23 of Act 930
Use of the word “bank”
62
Section 24 of Act 930
Display of licence
63
Section 25 of Act 930
Places of business to be licensed
64
Section 26 of Act 930
Representative offices
65
Section 27 of Act 930
Change of Company Regulations and other instruments of banks or specialised deposit-taking institutions
66
Section 43 to 47 of Act 930
Registration requirements for financial holding companies
67
Section 91 to 106 of Act 930
Power of supervision and control
68
Regulatory and supervisory roles of the BOG
1. Issuing directives. (s 92) 2. Information and periodic returns. (s 93) 3. Examination of the operations. (s 94) 4. Investigations or scrutiny into a specific matter or activity or office. (s 95) 5. Power of examiners to investigate records of banks, SDTIs, and FHCs. (s 96) 6. Taking custody of records. (s 97) 7. Verification of information. (s 98) 8. Examination reports by Banks, SDTIs, FHCs. (s 99) 9. Follow-up action on examination and other supervisory reports. (s 100) 10. Appointment of advisor for Banks, SDTIs, FHCs. (s 101) 11. Remedial measures for Banks, SDTIs, FHCs. (s 102) 12. Remedial measures for directors, key management personnel. (s 103) 13. Prompt corrective measures for adequately capitalized banks, SDTIs, FHCs suffering material losses. (s 104) 14. Prompt corrective measures for undercapitalized banks, SDTIs, FHCs. (s 105) 15. Prompt corrective measures for significantly undercapitalized banks, SDTIs, FHCs. (s 106)
69
Paid up capital
The amount of money a company had received from shareholders in exchange for capital
70
Capital requirement
A capital requirement is the amount of capital a bank or other financial institution has to have as required by its financial regulator
71
Section 28 of Act 930
Minimum paid up capital
72
Section 29 of Act 930
Capital adequacy and other capital requirements
73
Section 30 of Act 930
Additional capital in respect of special risk
74
Section 31 of Act 930
Capital adequacy requirements on a consolidated basis
75
Section 32 of Act 930
Notifying non-compliance with capital requirements
76
Section 33 of Act 930
Penalty of non-compliance with capital requirements
77
Section 34 of Act 930
A reserve fund into which shall be transferred out of net profits for each year
78
Section 35 of Act 930
Restrictions on declaration and payment of dividend
79
Liquidity Risk
is a financial risk that for a certain period of time a given financial asset, security or commodity cannot be traded quickly enough in the market without impacting the market price.
80
Section 36 of Act 930
Liquidity requirements.
81
Section 37 of Act 930
Maintenance of liquid assets on a consolidated basis.
82
Section 38 of Act 930
Additional liquidity requirement for additional risk
83
Section 39 of Act 930
Notification of non-compliance with minimum liquidity requirements
84
Section 40 of Act 930
Penalties for non-compliance with liquidity requirements
85
Section 41 of Act 930
Maintenance of Net Open Position
86
Net open position
means the net sum of all foreign currency, assets, and liabilities of a financial institution inclusive of all of its spot and forward transactions and off balance sheet items in that foreign currency
87
Spot transaction
The trading of currencies at the spot rate/ or in other words at a contracted price for a transaction that is taking place immediately.
88
Forward transactions
Trading of currencies at the forward rate / at the settlement price for a transaction that will take place in a predetermined date in the future
89
Section 47 of Act 930
Power to require the restructuring of ownership
90
Section 48 of Act 930
Withdrawal of registration by BOG. The BOG may withdraw the registration of a financial holding company and require divestiture of a bank or SDTI licensed under this Act.
91
Divestiture
A partial or full disclosure of a business unit through sale, exchange, closure, or bankruptcy.
92
Section 49 of Act 930
Transfer of shares affecting significant shareholdings
93
Section 50 of Act 930
Disapproval of transfer of shares in the interest of sound and prudent management of a bank or specialised deposit-taking institution and the functioning and stability of the overall financial system
94
Section 51 of Act 930
Restriction that ownership of a specific type of SDTI be limited to ownership by individuals or that ownership be capped at a certain percentage for all or some types of owners.
95
Section 52 of Act 930
Sale of business, mergers, amalgamations, and reconstructions
96
Section 53 of Act 930
Consideration of application. For the purpose of section 49 (transfer of shares affecting significant shareholdings) and section 52 (sale of business, mergers, amalgamations, and reconstructions), the BOG may in writing require an applicant or a person who is a director, key management personnel or financial holding company of an applicant to provide additional information or documents.
97
Section 54 of Act 930
Review of applications for approval of sale of business, mergers, amalgamations, or reconstructions
98
Section 55 of Act 930
Penalties for non-compliance
99
Section 56 of Act 930
The BOD may prescribe rules regarding any matter of corporate governance
100
Section 57 of Act 930
Duty of directors to report
101
Section 58 of Act 930
Disqualification of directors and key management personnel

Commercial Law (2 decks)

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