BoG Governor Urges Judicial Caution in Insolvency Rulings to Preserve Financial Stability
The Governor of the Bank of Ghana, Dr. Johnson Pandit Asiama, has urged Ghana’s judiciary to exercise prudence in adjudicating cases related to bank resolutions and insolvency, warning that adverse rulings against regulatory decisions could undermine financial stability and investor confidence.
Delivering the keynote address at a sensitisation programme for selected judges of the judiciary, held at Peduase Lodge on Thursday, Dr. Asiama said the courts play a critical role in interpreting the country’s insolvency and banking laws but must do so in a way that preserves regulatory integrity and economic stability.
“Adverse court determinations against administrative decisions of the regulator in insolvency proceedings have the tendency to create significant legal uncertainties, unwind contractual arrangements and risk financial instability,” Dr. Asiama said.
He cited the 2023 Supreme Court ruling in Dr. Papa Kwesi Nduom & Others v. Bank of Ghana & Others as a landmark case that clarified the jurisdiction of the Human Rights Court in reviewing bank resolution decisions. The case, he noted, underscored the importance of judicial oversight in ensuring due process but also highlighted the delicate balance between justice and systemic stability.
Dr. Asiama emphasised that the Bank of Ghana’s interventions in distressed financial institutions are guided by the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930) and the Corporate Insolvency and Restructuring Act, 2020 (Act 1015)—two pillars of Ghana’s financial regulatory architecture.
He disclosed that Act 930 is currently under review to strengthen the central bank’s mandate in bank resolution and to align Ghana’s framework with international best practices. The amendments, he said, aim to “clarify the Bank of Ghana’s resolution powers, enhance financial stability provisions, and ensure an orderly and credible resolution regime.”
Quoting Principle 5.5 of the Financial Stability Board’s Key Attributes for Effective Resolution Regimes, Dr. Asiama noted that global standards discourage judicial actions that could reverse measures taken by resolution authorities acting within their legal powers and in good faith. “Instead, legislation should provide for redress by awarding compensation, if justified,” he said.
The Governor also highlighted the need for speed and decisiveness in handling insolvency cases, observing that “delays in the judicial process can lead to a diminution in asset value and jeopardise enterprise viability.”
Dr. Asiama outlined the Bank’s statutory mandate—maintaining price stability, promoting economic growth, ensuring the efficient operation of the banking and credit system, and safeguarding financial stability—and said a sound insolvency regime was essential to achieving these goals.
He cited weak governance, insider dealings, creative accounting, and poor risk management as among the common causes of insolvency in banks and specialised deposit-taking institutions.
The sensitisation programme, organised by the Office of the Registrar of Companies under the theme “Judicial Sensitisation on Insolvency and Beneficial Ownership Laws”, forms part of efforts to build greater synergy between the judiciary and regulatory bodies in implementing Ghana’s corporate and financial laws.
“The Bank of Ghana remains committed to promoting economic growth, ensuring the efficient operation of the banking system, and supporting the development of an effective corporate insolvency regime,” Dr. Asiama concluded.
