Banking Law

GODWIN DJOKOTO ESQ.

UNIVERSITY OF GHANA SCH OF LAW
APRIL 2021
 Reading materials
 TEXT

 Byles on Bills of Exchange
 R. M. Goode, Commercial Law
 L.S. Sealy and RJA Hooley, Commercial Law, Text, Cases, and Materials
 Ellinger’s Modern Banking Law
 Paget’s Law of Banking
 Djokoto, G., “60 years of banking in Ghana: Landmarks of the past and Lessons for the future” in Christine
Dowuona Hammond, Ama F. Hammond and Raymond A. Atuguba -Mobilising the Law for Ghana’s Future,
2020 at 203
 Djokoto, G., The Law of Mortgages in Ghana
 LEGISLATION
 Constitution,1992
 Anti-Money Laundering Act, 2020(Act 1044)
 Anti-Terrorism Act, 2008(Act 762)
 Banks and Specialised Deposit –Taking Institutions Act, 2016(Act 930)
 Bank of Ghana Act, 2002 (Act 612)
 Bills of Exchange Act, 1961 (Act 55)
 Borrowers and Lenders Act, 2020(Act 1052)
 Court (Award of Interests and Post Judgment Interest) Rules , 2005(CI 52)
 Electronic Transactions Act, 2008
 Finance Lease Law, 1993 (P.N.D.C. L 331)
 Foreign Exchange Act, 2006 (Act 723)
 Ghana Deposit Protection Act, 2016
 Non-Bank Financial Institutions Act, 2008 (Act 774)
 Payment Systems Act, 2003 (Act 662)
 CASES

 Joachimson v Swiss Bank [1921] 3 KB 110
 Foley v Hill(1848) 2HLC 28
 Libyan Arab Foreign Bank v Bankers Trust Co. [1989] QB 728
 Ligget (Liverpool) Ltd v. Barclays Bank [1928] 1 KB 48
 London Joint Stock Bank Ltd v. Macmillan & Arthur [1918] AC 777
 Sampson Xeponu Tommey v Standard Chartered Bank Gh. Ltd (2008-2018) CLRG
 Ghana National Association of Teachers v Standard Chartered Bank, (2008-2018) CLRG
 Tournier v National Provincial and Union Bank of England [1924] 1 KB 461
 Greenwood v Martin’s Bank Greenwood v Martin’s Bank Ltd [1933] AC 51
 Tai Hing Cotton Mill Ltd v Liu Chong Hing Bank Ltd [1986] AC 80.
 Tsegah v Standard Chartered Bank (2001) unreported(on file)
 Standard Chartered Bank Ghana Ltd v Victoria Island Properties & Anz Grinlays Bank Ltd [2007-
2008] SCGLR 721
 Guinness Ghana Ltd v Rafsco Distributing Ltd [2007-2008] SCGLR 151
 Republic v High Court , Accra : Ex parte Chinto [1993-94] 1 GLR 159
 Diab v Quansah, [1974] 1 GLR 101
 Bharwani v Mansour, [1963] 2 GLR 349
 Board of Directors of Orthodox Secondary School of Peki v Tawlma-Abels, [1974] 1 GLR 419, CA.
 Cases


Busumakura II v Yankum, [1965] GLR 345, SC.
 Ghana Commercial Bank v Awisto (Missionary) Emporium, [1962] 1 GLR 50
 Sabblah v Tawiah, [1966] GLR 145
 Barclays Bank (D.C.O.) v Dabo, [1964] GLR 637
 Boohene Foods Ltd v National Savings and Credit Bank [1992] 1 GLR 175
 Bank of West Africa Ltd. v Appenteng, [1972] 1 GLR 153, CA.
 Republic v Non-Performing Assets Recovery Trust; Ex parte Bank for
Housing & Construction, [1995-96] 1 GLR 591, SC.
 Ghana Commercial Bank v Odom, [1975] 2 GLR 54, CA.
 Ghana Commercial Bank Ltd v NAOS Holdings Ltd, [1999-2000] 1 GLR 485
 Commissioner of Police v Danquah, SC [1962] 2 GLR 114.
 State v Agyeman, SC [1962] 2 GLR 67.
 Dacosta & Ors v Ofori Transport Ltd [2007-2008] SCGLR 602.
 Hungarotex Foreign Trading Co. v. Boateng [1984-86] 1 GLR 611
 Amalgamated Bank Ltd v Fraga Oil Ghana Ltd [2012] 48 G.M.J 149
 Hajaara Farms Ltd v SG-SSB [2012] 43 GMJ 97.
 Mensah v Ahenfie Cloth Sellers Association [2010] SCGLR 680
 What is banking?

 Banking is essentially the business of financial
intermediation-taking money from those who have
and giving it those who do not have(in the form of a
loan) at a price.
 The bank charges interest and other commissions,
which may be used to pay interests to the bank’s
depositors and produce profit for the owners of the
bank.
 Banking has also evolved to include the provision of
other services.
 Classification

 Banking regulation
 Banker–customer relationship
 Payment systems including Bills of Exchange,
Cheques and Promissory Notes
 Laws

 The principal enactment governing banking business
is the Bank and Specialised Deposit–Taking
Institutions Act, 2016(Act 930).
 Application of Act 930

 Act 930 applies to banks, specialized deposit–taking
institutions, financial holding companies, and
affiliates of banks, specialized deposit-taking
institutions and financial holding companies.
 It applies to Rural banks, Savings and loans
companies and microfinance institutions as well
 This Act does not apply to credit unions which are
subject to licensing and supervision under the Non-
Bank Financial Institutions Act, 2008(Act 774). S.1 as
well as the Co-Operative Societies Act, 1962(NLCD
252)
 Relationship btn Acts &
930 & 992

 The two Acts are to be read together. However,
where there is a conflict or inconsistency between the
2 Acts, Act 930 shall prevail. S.2
 S.4 of Act 992 provides that the Act does not
abrogate or affect legislation relating to companies
carrying on the business of banking, insurance or
any other business which is subject to special
regualtion.
 Validity of existing
licences

A bank or SDI licensed under or provided for under
Act 673 or established under any other enactment and
in existence before the coming into force of Act 930 is
continued in existence subject to compliance with this
Act 930. S. 158, Act 930
 What is a bank?

 At common law, the traditionally test for a bank is
said to be an entity that keeps accounts debited and
credited, credited money from customers, in the
form of cheques and cash, debited its customers’
accounts with cheques and standing orders and
which was regarded as a bank by the financial
community.
 United Dominion Trust v Kirkwood [1966] 2 QB 431
 United Dominion Trust
v Kirkwood

 UDT sued Kirkwood for a debt. Kirkwood’s defence
was that UDT was a money lender(not a bank) and
that because the Moneylenders Act 1900 required all
money lenders to be registered before they could sue
for their debts, UDT could not sue it. UDT in fact had
not registered as a money lender. The Court of
Appeal held that UDT was not a money lender but a
bank and therefore not required to register to be
entitled to sue for its debts.
Definition of bank & SDTI under Gh
law

 S. 156 defines a bank as “a body corporate which
engages in the deposit–taking business and issued
with a banking licence in accordance with this
Act[Act 930]”
 Specialised deposit-taking institution-is a body
corporate which engages in the deposit–taking
business and is issued with a licence to engage in
the deposit-taking business in accordance with this
Act[Act 930]
 Definition of STDI
Cont’d

 Financial holding company–is a company that
controls a bank or a specialized deposit–taking
institution which is subject to registration
requirements under this Act.
 Deposit taking Microfinance institution-is a
specialized deposit-taking institution engaged
primarily in the provision of deposit-taking and
credit services targeted at low income clients and
economically active poor. S. 156
 Meaning of deposit –
taking business

 Means the business of taking money on deposit and
making loans or other advances of money; and
financial activities prescribed by the BoG for the
purposes this definition.
 BANKING
REGULATION IN

GHANA
 Why regulate the banking industry?
 Proper and efficient conduct of banking activities.
 Ensure that banks play according to the laws and
regulations
 Any adverse effect on the banking system creates a
negative situation for the economy. Hence the need for
regulation of the industry. The prevention and
resolution of financial intermediary crises.
 Supporting sound management and internal controls
 Bolstering confidence
 Ensuring solvency of financial institutions etc
 Permissible activities of banks
s.18 of Act 930



(1) A bank or SDTI shall not carry on a business, other than any of the following:
 (a) acceptance of deposits and any other repayable funds from the public;
 (b) lending;
 (c) financial leasing;
 (d) investment in financial securities. Essentially financial instruments
that have monetary value and can be traded [egs. Equity securities, debt
securities, bonds, and debentures]
 (e) money transmission services;
(f) issuing and administering means of payment including credit cards, travellers
cheques and bankers’ drafts;
 (g) guarantees and commitments;
 (h) trading for own account or for account of customers in
 (i) money market instruments,[financial security for short term
duration, normally not exceeding one year. Egs. Treasury Bills, Bankers Acceptance, Commercial
papers
 (ii) foreign exchange, or
 (iii) transferable securities;

 Permissible activities
cont’d

participation in securities issues and provision of services related to those issues;
 advice to undertakings on capital structure, acquisition and merger of
undertaking;
 portfolio management and advice;[making decisions about investment mix,
matching investments to objectives, and balancing risk against performance]
 the keeping and administration of securities;
 credit reference services;
 safe custody of valuables;
 electronic banking;
 Bancassurance. [the selling of life assurance and other insurance
products and services by banking institutions). Insurance companies use bank sales
channels to sell insurance products]
 Non-interest banking services-Eg. Islamic banking
 and
 any other services as the Bank of Ghana may determine.
 Restrictions on
permissible activities

 However, a SDTI is not permitted to engage in the
trading of foreign exchange or offer services
denominated in a foreign currency.
 The Bank of Ghana may, by directive restrict the
permissible activities of banks in general or a class of
banks or an individual bank or remove the
restriction so imposed as it considers appropriate.
 Permissible activities

 A bank or SDTI must seek the prior written approval
of the BoG to introduce products that are derived
from the permissible activities specified above.
 In carrying out permissible activities and in
introducing new products , a bank and SDTI must
ensure that any material, publication or advert
relating to the activities and products do not contain
false or misleading information.
 BANK OF GHANA

The Bank of Ghana as the central bank is the regulator
of the banking industry. The BoG is independent of
instructions from the Government or any other
authority(Sec 3 of Act 612).
 Functions of the Bank of
Ghana

 Article 183 of the Constitution
 The Bank of Ghana shall be the Central Bank of Ghana and shall be the
only authority to issue the currency of Ghana.
 (2) The Bank of Ghana shall
 (a) promote and maintain the stability of the currency of Ghana and
direct and regulate the currency system in the interest of the economic
progress of Ghana;
 (b) be the sole custodian of State funds of Ghana both in and outside
Ghana and may, by notice published in the Gazette, authorise any other
person or authority to act as a custodian of any such fund as may be
specified in the notice;
 (c) encourage and promote economic development and the efficient
utilisation of the resources of Ghana through effective and efficient
operation of a banking and credit system in Ghana; and
 (d) do all other things not inconsistent with this article as may
be prescribed by law.
 Primary objective of BoG
S. 3 of Act 612

 (1) The primary objective of the Bank is to maintain
stability in the general level of prices.

 (2) the Bank of Ghana is mandated to support the

general economic policy of the Government and
promote economic growth and effective and efficient
operation of banking and credit systems in the
country.
 Functions of BoG Cont’d
(BANK OF GHANA ACT, 2002

 Section 4 of Act 612(2002)


 (1) In addition to its functions under article 183 of the Constitution, the Bank shall for the
purposes of section 3,
 (a) formulate and implement monetary policy aimed at achieving the objects of
the Bank;
 (b) promote by monetary measures the stabilisation of the value of the currency within and
outside the Republic;
 (c) institute measures which are likely to have a favourable effect on the balance of payments,
the state of public finances and the general development of the national economy;
 (d) regulate, supervise and direct the banking and credit system and ensure the smooth
operation of the financial sector;
 (e) promote, regulate and supervise payment and settlement systems;
 (f) issue and redeem the currency notes and coins;
 (g) ensure effective maintenance and management of the Republic’s external financial
services;
 (h) license, regulate, promote and supervise non-banking financial institutions;
 (i) act as banker and financial adviser to the Government;
 Functions of BoG
(cont’d)

 (j) promote and maintain relations with
international banking and financial institutions and
subject to the Constitution and any other relevant
enactment, implement international monetary
agreements to which the Republic is a party; and
 (k) do all other things that are incidental or
conducive to the efficient performance of its
functions under this Act and any other enactment.
 See S. 3 of Act 930 as well
 GOVERNOR OF THE
BANK OF GHANA

 The Bank of Ghana is headed by the Governor of the Bank of Ghana.
 Art 183 of 1992 Constitution
 (4) The following shall apply to the Governor of the Bank of Ghana:
 (a) he shall be appointed by the President acting in consultation with the
Council of State for periods of four years each;
 (b) he shall, notwithstanding article 285 of this Constitution be the
Chairman of the governing body of the Bank of Ghana; (Article 285: A
person shall not be appointed or act as the Chairman of the governing
body of a public corporation or authority while he holds a position in the
service of that corporation or authority.).
 (c) his emoluments shall not be reduced while he continues to hold
office as Governor;
 (d) he shall not be removed from office except on the same grounds and
in the same manner as a Justice of the Superior Court of Judicature, other
than the Chief Justice, may be removed.
 The Authority of Directors
(Board of Directors)

 The governing body of the Bank is the Authority of
Directors consisting of,
 (a) the Governor of the Bank who shall be the
chairperson,
 (b) the First and Second Deputy Governors
appointed under section 17 of Act 612,
 (c) one representative of the Ministry of
Finance, and
 (d) eight other directors appointed by the
President in consultation with the Council of State.
Functions of the Authority

 The Authority shall formulate policies necessary for the
achievement of the objects of the Bank.

 Authorised shares of the Bank

 (1) The authorised number of shares of the Bank shall be
seven hundred billion shares of no par value which shall
be taken up from time to time by the Government and
may be increased from time to time.
 (2) The shares are not transferable or subject to an
encumbrance.
 OPERATING A
BANK&SDTI

The BoG is mandated to license, regulate,
promote and supervise banking financial
institutions.

Licensing of Banks & SDTI

A person shall not carry on deposit taking
business in or from Ghana unless that
person is a body corporate formed under
the laws of this country. S.4(1)
Operating a bank /SDTI

 A person that is not a body corporate formed under
the laws of Ghana may with the prior written
approval of BoG, carry out a deposit taking business
in or from within Ghana.
 BoG shall issue directives to govern the operations of
such exempted persons.
 In the case of deposit taking microfinance
institutions, the shareholders must be Ghanaians.
 Banking licence mandatory
S. 6(Act 930)

 A person shall not accept a deposit from the general
public or carry on a deposit taking business in or
from within Ghana without a licence issued in
accordance with Act 930.
 A person shall not use a licence issued under this Act
for any purpose other than that for which it is issued.
 Where it is uncertain in a particular case whether a
particular liability of a bank or SDTI is to be
regarded as a deposit, the BoG shall determine
whether that liability is a deposit.
 Consequence of unauthorized deposit
taking business- S. 22

 A person who carries on a deposit-taking business
without a licence or in breach of the conditions of a
licence commits an offence.

 Liable on summary conviction

 Body corporate-fine not less than 2,500 penalty units

and not more than 5,000 penalty units
 Consequences

 Director of a body corporate or other body of
persons- a fine of not less than 1,500 penalty units
and not more than 3,000 penalty units or to a term of
imprisonment of not less than 2 years and not more
than 4 years
 Individual- a fine of not less than 1,000 penalty units
and not more than 3,000 penalty units or to a terms
of imprisonment of not less than 2 years and not
more than 4 years
 The Rep v Appiah

 On Count one, the accused is charged with
Operating an Investment Company without license
contrary to Sections 4(1) and 4(3)(b) of the Banking
Act, 2004(Act 673).

 On counts 2 through to Count 180, the accused is
charged with defrauding by false pretences contrary
to Section 131 of the Criminal Offences Act, 1960 (Act
29).
 The Rep v Appiah

 It came to light during investigations that Prymehedge Investments is a
registered company but when it commenced business in 2011 it did not
have a license from the bank of Ghana to engage in banking business. It
also came out during investigations that the modus operandi of the
accused was to lure potential investors with high interest returns on their
funds which he would usually pay up to a point just to win their
confidence and then stop. It also came to light that the accused person at a
point could not pay the complainants because new investors were not
coming and that was the point when the whole scheme came crashing. A
total sum of about Five Million, Two Hundred and Twenty Three
Thousand, Seven Hundred Ghana Cedis (5,223,700.00) and One Hundred
and Eighty Two Thousand, One Hundred and Sixty Five Dollars
($182,165.00) were invested by the complainants and from the date of
arrest till today the accused has not paid any amount to any of the
complainants.
 The accused pleaded not guilty to all the 180 counts
 The Rep v Appiah

 Accused is sentenced to three (3) years imprisonment
on Count One and 20 years imprisonment on Count
2 through to Count 180. The sentences to run
concurrently.
 Application for licence
S.7

 A person who seeks to carry on a deposit–taking
business shall apply in writing to the BoG for a
licence. An application for a licence shall be made in
writing to the Bank of Ghana and shall be
accompanied with
 (a) a certified true copy of the Regulations or any
other instrument relating to the proposed bank or
under which a person proposing to carry on banking
business was established;
 Application for licence
(cont’d)

 (b) the names, addresses, and occupations of persons
including their corporate affiliations who will hold
significant shareholdings, directly or indirectly, in the
proposed deposit-taking business and the respective
values of the share holdings and their certified financial
positions;
 (c) the particulars of the directors or key management
personnel concerned with the management of the
deposit-taking business, including their background,
certified financial position, business interests and
performance of the business concerns under their control
or management;
 Application process

 (d) the feasibility reports including a business plan
and financial projections for the first five years and
areas of specialisation intended;
 Where the bank or SDTI is a member of a corporate
group, provide a complete organizational structure
including a group diagram; direct and indirect
affiliates and associates
 (e) documentary evidence of the capital,
their source and any other sources of
funds(GHC400M); and S&L=15M, Microfinance=2m
 Application for licence

 (f) in the case of a foreign applicant, an authenticated copy of its
certificate of registration and a written confirmation from the
banking supervisory authority in the applicant’s country of
incorporation that the supervisory authority has no objection to the
applicant’s proposal to carry on deposit-taking business in Ghana;
 (g) the measures and structures it intends to adopt to ensure that
its business is conducted in accordance with sound corporate
governance principles;
 (h) the processing fees and licence fees that the Bank of
Ghana may by notice specify;
 (i) any other particulars that the Bank of Ghana may
require.
 (2) Each application shall state clearly the type of licence that is
being applied for.
 Application

 A statutory declaration for each proposed director,
key management personnel and significant
shareholder of the proposed bank or SDTI disclosing
where applicable a conviction for an offence by court
of a competent jurisdiction, a personal bankruptcy
filing, a disqualification from practicing a profession,
or a past or present involvement in a managerial
function of a body corporate or other undertaking
that is subject to insolvency or liquidation
proceedings
 Application for
licence(cont’d)

 The Bank of Ghana may interview the promoter,
directors and proposed senior management
personnel in the course of an appraisal and may also
inspect their books and records to satisfy itself about
the representations made or information furnished
by the applicant.
 (5) The Bank may require that information supplied
to it be verified, certified or otherwise authenticated
in the manner that the Bank may consider fit.
 Timelines

 BoG is mandated within 10 days of the receipt of an
application acknowledge in writing the receipt of the
application; and within 6 months after the receipt of
an application communicate its decision in writing to
the applicant.
 However, where the BoG is of the opinion that
further investigation or information is required to
process the application, the BoG shall within a
reasonable period after the 6months notify the
applicant and subsequently inform the applicant in
writing of the decision of the BoG.
 Types of licences S. 8

 A licence shall be designated either as banking
licence or a SDTI licence
 A licence issued under Act 930 is subject to terms
and conditions that the BoG may impose.
 The terms and conditions may be stated in the notice
of approval of a licence and shall be considered to
form part of the licence.
 Types of licences

 A SDTI licence shall be issued to an applicant whose
primary activities are limited to deposit taking
business.
 The name of SDTI shall clearly designate which
category of SDTI licence that institution operates
under in accordance with rules prescribed by the
BoG.
Pre-requisites for a licence
S. 9

 A licence shall not be granted by the Bank, unless it
is satisfied that
 The feasibility report submitted by the applicant is
based on sound analysis under reasonable
assumptions; and
 The proposed directors and key management
personnel of the applicant are fit and proper persons
 fit and proper person

 “fit and proper person” means a person who is suitable to hold
the particular position which that person holds or is to hold as
regards the probity, competence and soundness of judgment
of the person for purposes of fulfilling the responsibilities of
that person; the diligence with which that person fulfils or is
likely to fulfill those responsibilities; whether the interest of
depositors or potential depositors of the entity are threatened,
or likely to be, in any way threatened by the person holding
that position; and
 that the integrity of the person is established and the
qualifications and experience of the person are appropriate for
the position in the light of the business plan and activities of the
entity which the person serves, or is likely to serve, taking into
account the size, nature and complexity of the institution;
 Pre-requisites

 The significant share holders are suitable and the
ownership structure of the proposed bank or SDTI
will not hinder effective supervision, including
supervision on a consolidated basis.
 “significant shareholding” means a direct or indirect
holding which represents five percent or more of
the capital or of the voting rights;
 The paid –up capital of the applicant is adequate and
the original sources of capital are acceptable and do
not include borrowed funds
 Pre -Requisite

 The arrangements for governance, including accounting,
risk management and internal control systems and
records of the applicant are adequate
 The applicant is not a shell company; and [“shell
company” means a company that has no physical
presence in the country in which it is incorporated and
licensed, and that is unaffiliated with a regulated financial
service group that is subject to effective consolidated
supervision;]
 The applicant has complied with Act 930, the Regulations,
and other legally binding instruments made under this
Act and any conditionals that the BoG may impose.
 Provisional approval
S.10

 The BoG may issue a provisional approval of a
licence for bank, a subsidiary of a foreign bank or
SDTI provided that BoG is satisfied that the foreign
bank or SDTI is adequately supervised on a global
consolidated basis by the home country supervisor
of that bank or SDTI of that bank or SDTI and
 The arrangements of cooperation, coordination and
information sharing with the home country
supervision are in place
 Provisional approval

 Where the bank or SDTI fails to comply with the
terms and conditions of the provisional approval
within one year of the provisional approval, the
provisional approval shall lapse.
 Prohibition against raising capital
through public issue of shares S.11

 An applicant for licence shall not invite capital
through the public issue of shares for the purpose of
the proposed deposit-taking business unless final
approval is given in accordance with section 12.
 The BoG may for stated reasons vary the
requirement for invitation to public to subscribe in
respect of rural and community banks.
 (3) An applicant who contravenes this provision is
liable to pay to the BoG an administrative penalty of
5000 penalty units
 Final approval and issue
of banking licence S. 12

 . (1) The Bank of Ghana shall issue to the applicant a
final approval and a licence of a specified type to carry on
deposit taking business, after the Bank of Ghana is
satisfied
 (a) with the organisational and infrastructural
arrangements made by the applicant, and
 (b) that the applicant has complied with the
terms and conditions stipulated in the provisional
approval and the prerequisites of a licence have been met
 (2) A licence issued under this Act shall
 (a) be subject to the conditions that the Bank may
impose;
 Final licence (cont’d)

 The holder of a licence issued under this Act shall
pay an initial fee and the annual licence fees that the
Bank of Ghana may specify by notice.

 The BoG shall notify the institution responsible for

deposit protection of the issuance of a licence to a
bank or SDTI.
 Non-transferability or
assignment of licence

 No licence granted by the Bank of Ghana shall be
transferable or assignable. Under the previous
regime it was permissible to transfer with prior
consent of BoG.
 Egs. Metropolitan and Allied Bank –UT Bank Ltd;
Citi Savings and Loans –Intercontinental Bank;
Amalgamated Bank –Bank of Africa Limited
International Commercial Bank (ICB)-FNB Bank etc
 Refusal of application S.
15

 The BoG may refuse an application for banking or a
licence to engage in deposit taking business where in
view of the prevailing conditions in the banking and
SDTI sector or in keeping with the policy on banks
and SDTIs, the BoG is not satisfied with the merits of
the application.
 Where the BoG refuses an application it may give
reasons in writing for the refusal of the application.
 Review of decisions of
BoG S. 140

 A person aggrieved by the decision of the BoG may
within 30 days petition the BoG in writing for review
 Where the person is dissatisfied with the outcome of the
review above he may within 30 days from the date of the
decision, in writing, appeal against the decision to the
Adjudicative Panel established by the Chief Justice under
subsection (3)
 The Adjudicative Panel shall communicate its decision to
the applicant within 30 days of receipt of the appeal made
to it in writing
 A person dissatisfied with the decision of the
Adjudicative Panel may appeal to the High Court within
30 days upon receipt of the decision.
 Restrictions imposed on banks s.19,
61-74

 A bank, SDTI or FHC shall not directly engage in a
commercial, an agricultural or an industrial
undertaking.
 Restrictions acquisition of
interest in immovables. S. 19(2),

 Subject to the limits that the BoG may prescribe, a bank,
SDTI or FHC shall not build, purchase or take a lease of
immovable property except
 for the provision of premises or housing the business or
staff of the bank; or
 for the provision of amenities for its staff.
 However, a bank, SDTI or FHC may accept immovable
property as security for a debt or any other liability and
may acquire an interest which a bank may lawfully
acquire in the satisfaction of a debt due to it.
 Immovable Restrictions
(contd) S. 19

 An interest acquired in an immovable property as
security for a debt or other liability shall be disposed
of by the bank, SDTI or FHC within one year after
the acquisition or within a longer period that may be
determined by the Bank of Ghana on an application
made by the bank.
 This section does not prevent a bank from letting or
subletting a part of immovable property which is
ordinarily used for housing its business where the
property is in excess of the immediate requirements
of the bank, SDTI or FHC.
Consequences of breach

 Contravention – Administrative penalty of 1,500
penalty units and for each day that the
contravention continues an additional penalty of 200
penalty units.
 Prohibition of Advances against
Security of Own Shares. S61

 (1) A bank, SDTI or FHC shall not grant any
advances, loans or credit facilities including
guarantees, against the security of,
 (a) its own shares,
 (b) the shares of its holding company,
 (c) the shares of any of its subsidiaries, or
 (d) the shares of any of the subsidiaries of its holding
company.
 Prohibition of advance against
security of own shares

 A bank or SDTI is not permitted to issue shares that
are paid for by funds borrowed from that bank or
SDTI.
 A transaction carried out in contravention of s. 61 is
void.
 A director or key management personnel who
contravenes the above provisions is personally liable
to pay to the BoG an administrative penalty of 2000
penalty units.
 Limits on financial
exposure S. 62

 A bank or SDTI is not permitted to take financial
exposure in respect of a person or a group of
connected persons which constitutes in the
aggregate, a liability amounting to more than 25% of
the net own funds of that Bank or SDTI or a lower
percentage that the BoG may prescribe.
 An unsecured financial exposure shall not exceed 10
% of the net own funds of a bank or SDTI
 Net own funds S. 156

 Includes the sum total of share capital that has been
paid-up, free reserves but excludes revaluation
reserves, on property, plant and equipment, other
than non-distributable reserves unless with the
approval of the BoG, other than the Reserve Fund
capitalized under s. 34, subject to netting out
accumulated losses, goodwill and unwritten off
capitalized expenditure including pre-operating
expenses and deferred tax
 Meaning of 2 or more persons
constitute a group

 Two or more persons constitute a group of connected
persons if
 A direct or indirect control relationship exists between
them
 Any other relationship exists to the extent that the
financial soundness of any of them may affect the
financial soundness of the other person
 Same factors may affect the financial soundness of some
persons or group of persons
 As a result of the structure of their relationship, the other
person is ultimately responsible for or benefits from the
financial exposure outstanding
 Restrictions on transactions with an
affiliate S. 64

 A bank, SDTI or FHC is not permitted to grant or to
permit to be outstanding, a financial exposure in
respect of an affiliate of that bank, SDTI or FHC
except on terms which are non-preferential in all
respects including creditworthiness, term, interest
rate and the value of the collateral.
 A bank, SDTI or FHC shall not take a financial
exposure in respect of an affiliate if the aggregate of
the financial exposures to the affiliate exceeds 25 %
of the net own funds
 Financial exposure to
affiliate

 However, the BoG may by Order set a specific limit
on a financial exposure to an affiliate on an
individual basis, having regard to the circumstances
of the bank, SDTI or FHC
 Breach- administrative penalty of 2000 penalty unit
and 2500 penalty units against a director or key
management personnel
 Restrictions on lending
to staff S. 69

 A bank, SDTI or shall not lend on preferential terms
to an employee of that institution unless the lending
is part of a formally approved employment package
or employee benefit plan.
 A bank or SDTI is not permitted to grant to an
employee an unsecured advance or credit facility the
aggregate amount of which exceeds 2 years’ total
emoluments of that employee
 Lending to staff

 The aggregate amount of loans on preferential terms,
both secured and unsecured, by a bank or SDTI shall
not exceed 20% of the net own funds of that bank or
SDTI
 Restriction on establishment of a
subsidiary company

 A bank, SDTI or FHC shall not establish a subsidiary
without the prior written approval of the Bank of Ghana.
 A subsidiary company may only engage in a permissible
activity specified in section 18 in respect of a bank or
SDTI.
 Contravention-administrative penalty not exceeding 1000
penalty units. BoG may also direct the institution to
divest that subsidiary within a specified period.
 BoG may revoke licence as well if the institution fails to
comply with divestiture directive.
Limits Investment in subsidiary S. 72

 The equity capital invested in a subsidiary company
by a bank or SDTI shall not exceed 15% of the net
own funds of the bank or SDTI and where the bank
or SDTI has more than one subsidiary company the
equity capital invested in those subsidiary
companies by the bank shall not exceed in a the
aggregate 25% of the net own funds of the bank or
SDTI.

 Limits of investment in
subsidiary

 The aggregate amount of a loan, an advance, a
credit or any other facility and equity capital which
a bank or SDTI may grant and invest in a
subsidiary shall not at any one time exceed
 (a) 25% of the net own funds of the bank or SDTI,
in the case where the bank owns one subsidiary
company, or
 (b) 35% of the net own funds of the bank or SDTI, in
the case where the bank owns more than one
subsidiary company.
 REVOCATION OF BANKING LICENCE
S. 16


 A licence is essentially permission to do a thing
otherwise prohibited by law.

 The law permits the BoG to revoke a banking licence

in certain defined circumstances.

 Revocation of banking licence may be classified

either as permissive or mandatory.
 Permissive revocation
S. 16

 S. 16 uses “may” as the operative word..
 The law employs the ‘may’ which is permissive as
the operative word.
 The power to revoke a licence in terms of Section 16
is in addition to and without prejudice to the powers
given to BoG to take any other penal action under
the Banking Act.
 Permissive revocation

 BoG may revoke a licence issued under Section 12, where
 the Bank of Ghana is satisfied that an applicant
provided false, misleading or inaccurate information
in connection with the application for a licence or
suppressed material information;
 the bank or specialised deposit-taking institution fails
to commence business within one year from the date
the licence was issued;
 the bank or specialised deposit-taking institution fails
to fulfill or comply with the terms and conditions
stipulated in the licence;
Permissive revocation

 the bank or specialised deposit-taking institution carries on
business in a manner which is contrary or detrimental to the
interests of depositors or the public;
 the bank or specialised deposit-taking institution has been
convicted by a domestic court or any other court of competent
jurisdiction of a crime related to money laundering or terrorist
financing or is an affiliate or subsidiary of a parent or holding
company which has been so convicted;
 in the judgment of the Bank of Ghana, the bank or specialised
deposit-taking institution engages in unsafe or unsound
practices; or
 the bank or specialised deposit-taking institution persistently
contravenes this Act, the Regulations, directives or orders
made under this Act.
 Permissive

 S. 16(2)Subsection (1) does not limit the power of the
Bank of Ghana to take any other remedial or penal
action against a bank or specialised deposit- taking
institution.
Procedure for permissive revocation

 S16(3) Where the Bank of Ghana proposes to revoke the
licence of a bank or specialised deposit-taking institution
under subsection (1), the Bank of Ghana shall
 give notice in writing to the bank or specialised
deposit -taking institution,
 specify the proposed action and the grounds on which
the action is proposed to be taken, and
 give the bank or specialised deposit-taking institution
an opportunity to make a written representation
within thirty days of the service of the notice.
 Procedure

 S16(4)After the expiry of the notice period and
considering any representations made by the bank or
specialised deposit-taking institution, the Bank of
Ghana may
 decide whether to take the proposed action; or
 vary the proposed action as the Bank of Ghana
considers appropriate; and
 communicate the decision of the Bank of Ghana to
the bank or specialised deposit-taking institution.
Cessation of business Upon revocation


 16(5)Where BoG revokes the licence of a bank or
SDTI, that bank or SDTI shall cease to carry on the
deposit-taking business if the bank or SDTI has
already commenced business and shall surrender the
licence.
 16(6)A revocation of the licence of a bank or SDTI
shall have immediate effect.
 Revocation in emergencies


 S 16(7)Despite subsections (3) and (4), the Bank of
Ghana may in cases of emergency, or in the public
interest revoke the licence of a bank or specialised
deposit-taking institution without notice.
Initiation of receivership

 Where a licence is revoked under this section, the
Bank of Ghana shall immediately initiate a
receivership as provided in sections 123 to 139 and
notify the institution responsible for deposit
protection under the Deposit Protection Act , ….
 Mandatory revocation-S.123

 (1) Where the Bank of Ghana determines that the
bank or SDTI is insolvent or is likely to become
insolvent within the next sixty days, the Bank of
Ghana shall revoke the licence of that bank or SDTI
 The Bank of Ghana shall appoint a receiver at the
effective time of revocation of the licence under
subsection (1).
 The receiver appointed under subsection (2), shall
take possession and control of the assets and
liabilities of the bank or SDTI
 Meaning of “insolvent”

 For the purpose S 123, “insolvent” means the
inability of a bank or specialised deposit-taking
institution to pay its obligations as they fall due or
the circumstance where the value of the liabilities of
a bank or specialised deposit-taking institution
exceeds the value of its assets.
 The value of the assets, liabilities and regulatory
capital of a bank or SDTI shall be determined in
accordance with valuation standards and procedures
prescribed by the Bank of Ghana.
 Determination of insolvency

 In determining the value of the assets and liabilities
of a bank or SDTI for a future date, the anticipated
future income and expenses of the bank or
specialised deposit-taking institution until that date
shall be taken into account.
 The Bank of Ghana shall immediately notify the
institution responsible for deposit protection of a
decision made under this section.
 Receiver sole rep s.127

 (1) On the appointment of the receiver, the receiver
shall be the sole legal representative of the bank or
specialised deposit-taking institution, and shall
succeed the rights and powers of the shareholders,
the directors and the key management personnel of
the bank or specialised deposit-taking institution.
 Receiver accountable to
BoG S.126

 (1) The receiver shall act in accordance with the
directives, instructions, and guidelines given by the
Bank of Ghana in the course of the liquidation.
 The receiver shall be accountable only to the Bank of
Ghana for the performance of duties and the exercise
of powers as a receiver.
 Use of the word “bank” S. 23

 (1) Except as otherwise provided for in this Act, a
person, other than a company holding a banking
licence, shall not hold itself out as a bank or use the
word “bank” or any of its derivatives in any
language, or any word that sounds like “bank” in the
description or title under which that person is
carrying on financial services business in Ghana, or
make a representation to this effect in any billhead,
letter, paper, notice, advertisement or in any other
manner.
 “Bank” in other languages

 Banque/banc -French
 Banco-Spanish
 Banca-Italian

 Women’s World Banking –savings & Loans

Company
 FirstBanC Financial Services
 Procredit – “for your banking convenience”
 “Banking hall” in a savings and loans company?
 Use of “bank”

 The use of the word “bank” in the name of an
association of banks or of employees of a bank
formed for the promotion of mutual interests of its
members shall not be construed as a contravention of
subsection (1).
 Despite subsection (1), a specialised deposit-taking
institution that is licensed as a rural or community
bank may use the term “rural bank” or “community
bank”.
 Use of word “bank”

 The Bank of Ghana may prescribe similar restrictions on the use
of terminology related to other classes of specialised deposit-
taking institutions.
 A specialised deposit-taking institution shall in all correspon-
dence, publications and advertisement, use the full name of that
specialised deposit-taking institution as stated on the licence
issued by the Bank of Ghana.
 The Bank of Ghana may order a person who contravenes this
section to cease using the terminology that caused the
contravention and to change the name under which that person
operates.
 A person who contravenes this section is liable to pay to the
Bank of Ghana an administrative penalty of one thousand five
hundred penalty units.
 Disqualification of a director and
key management personnel S.58

 ) A person shall not be appointed or elected or, accept an
appointment or election, as a director or key management
personnel of a bank, specialised deposit-taking institution or
financial holding company if that person
 key management personnel” includes the chief executive,
deputy chief executive, chief operating officer, chief finance
officer, board secretary, treasurer, chief internal auditor, the
chief risk officer, the head of compliance, the anti-money
laundering reporting officer, the head of internal control
functions, the chief legal officer, the manager of a significant
business unit of the bank, a specialised deposit-taking
institution, or a financial holding company or any person
with similar responsibilities;
 Disqualification of a director and
key management personnel S.58

 (1) A person shall not be appointed or elected or, accept an appointment or
election, as a director or key management personnel of a bank, specialised
deposit-taking institution or financial holding company if that person
 has been adjudged to be of unsound mind or is detained as a person
with a mental disorder under any relevant enactment;
 has been declared insolvent or has entered into agreement with
another person for payment of the debt of that person and has
suspended payment of the debt;
 has been convicted of an offence involving fraud, dishonesty or moral
turpitude;
 has been a director, key management personnel or associated with the
management of an institution which is being or has been wound up by
a court of competent jurisdiction on account of bankruptcy or an
offence committed under an enactment;

 Disqualifications

 is a director or key management personnel of
another bank, specialised deposit-taking
institution or financial holding company in the
country;
 is below the age of eighteen years;
 does not have the prior written approval of the
Bank of Ghana; or
 has defaulted in the repayment of the financial
exposure of that person.
 Disqualifications

 A bank, specialised deposit-taking institution or financial
holding company which has knowledge or is aware of a
circumstance that subjects a director or key management
personnel to disqualification under subsection(l) shall
promptly notify the Bank of Ghana.
 Where a person becomes disqualified under subsection
(1), that person shall immediately cease to hold office as a
director or key management personnel and the bank,
specialised deposit-taking institution or financial holding
company shall immediately terminate the appointment of
that person.
 Penalty for breach

 A person who contravenes subsection (1) is liable to
pay to the Bank of Ghana an administrative penalty
of one thousand penalty units.
Exceptions to 58(1)(e) Director of
another bank

 Subsection (1) (e) does not apply where
 a person appointed as a director of the ARB Apex
Bank Limited is a director of a rural or community
bank;
 a person appointed as a director of a rural or
community bank is a director of another bank; or
 in the opinion of the Bank of Ghana, special
circumstances require that the person is appointed as a
director of another bank, specialised deposit-taking
institution or financial holding company.
 Capital Adequacy Ratio

 S. 156-Capital Adequacy Ratio is the ratio expressed
as a percentage of the adjusted capital base to the
risk weighted financial exposure.
 In simple terms, the % of the bank/SDTI capital in
relation to loans and advances you have given and
commitments undertaken
 Capital adequacy and other capital
requirements s. 29-41

 29(1) The Bank of Ghana shall, by a directive, prescribe a risk-
based capital adequacy requirement, which may be measured
as a percentage of the capital of the bank, specialised deposit-
taking institution or financial holding company to its assets.
 The minimum capital adequacy ratio shall be at least ten
percent.
 The Bank of Ghana may, having regard to the risk and
vulnerability of the financial system,
 prescribe a higher capital adequacy ratio percentage, or
 prescribe different ratios for different banks, financial
holding companies and for different classes of specialised
deposit- taking institutions.
 CAR

 The minimum capital adequacy ratio shall be calculated
in accordance with the methodology prescribed in the
directive issued by the Bank of Ghana.
 The Bank of Ghana may, for the purpose of calculating
the minimum capital adequacy ratio, define eligible
capital, categories of risk assets and appropriate
adjustments and additions.
 The Bank of Ghana may prescribe one or more capital
buffers above that required by the minimum capital
adequacy ratio and shall further prescribe whether failure
to maintain the required buffer will constitute failure to
meet the minimum capital requirements for purposes of
sections 30, 31 and 102 to 106.
 International influence in
banking regulation (Basel
Rules)

 the Basel Committee on Banking Supervision prescribes
rules on regulatory capital adequacy and capital
management of banks.
 The rules prescribed by the Basel Committee are not
binding on national authorities. However, they epitomise
global best practices on banks’ capital adequacy and risk
management.
 In nearly forty years, the Basel Committee on Banking
Supervision has issued three (3) Accords(Agreements),
namely, Basel I, which was issued in 1988; Basel II which
was issued in 2004 and Basel III which was issued in
2010.

International banking regulation

 The Basel Committee has a permanent secretariat at
the Bank for International Settlements(BIS) in Basel.

 The BIS does not participate in the Basel

Committee’s policy–making. It only provides a
venue for the Committee’s Secretariat and for
membership meetings.
 Banker and Customer
relationship

 S. 156 defines a bank as “a body corporate which
engages in the deposit–taking business and issued
with a banking licence in accordance with this
Act[Act 930]”
 Specialised deposit-taking institution-is a body
corporate which engages in the deposit–taking
business and is issued with a licence to engage in
the deposit-taking business in accordance with this
Act[Act 930]
 Customer

 The orthodox position is that a person becomes a
customer of a bank as soon as she opens an account
with a bank. Ladbroke& Co v. Todd (1914) 30 TLR
433).
 A series of transactions per se cannot constitute a
person into a customer; rather, a customer is a
person who has an account with a bank irrespective
of the duration of the relationship.
 Great Western Railway Co v London & County
Bank, [1901] AC 414
 Customer

 Woods v. Martins Bank & Anor1959] 1QB 55 it was
held that a bank which gave investment advice to
someone who did not have an account with the bank
had the same duty of care as if he had an account
with that bank.
 Banker & Customer Relationship

 The basic relationship between a banker and its
customers is contractual.
 A single contract governs the general relations
between the bank and its customers. Joachimson v
Swiss Bank Corporation
 The nature of the banking contract is that of a
Debtor–Creditor Relationship as regards deposits
(where the bank is the debtor and the customer is the
creditor), and the Creditor and debtor as regards a
credit (where the Bank is the creditor and the
customer is the debtor). Foley v Hill
 Implication of debtor-creditor
relationship

 First, it means that immediately a customer deposits money
with her bankers the money ceases to be hers. It is therefore
said that a customer does own any money in a bank. It is
inappropriate to speak of “all my money in the bank”
 Lord Cottenham in Foley v Hill: “Money, when paid into a bank,
ceases altogether to be the money of the principal. ....It is then the
money of the banker, who is bound to return an equivalent by paying
a similar sum to that deposited with him when he is asked for it….The
money placed in the custody of a banker is, to all intents and purposes,
the money of the banker, to do with it as he pleases”

 Foley v Hill, (1848) 2 HL Cas 28, 36.

 Implication of categorisation

 It is untenable for a person to raise a defence of
claim of right when he steals from his bankers to say
that the money he stole was in fact money he has
deposited with the bank.
 Libyan Arab Foreign Bank v Bankers Trust Co.
[1989] QB 728
 Contractual terms of relationship

 Generally, the terms of the contract between a bank
and its customers are implied by the common law,
informed by the practice of banking over the years.
However, the terms of the contract may also be
expressly set out in writing, especially terms that
have far reaching effects
 Secondary relationship

 Agency upon receipt of cheques and other payments

 Bailment – for safe custody of valuables

 Banker’s duties to customer

 The common law duties of a banker towards its customers are
outlined in the celebrated case of Joachimson v Swiss Bank
Corporation to include the following:
 abiding by the customer’s mandate
 honouring cheques properly drawn
 keeping the customer’s transactions and information
confidential
 exercising due care and skill in dealing with the
customer(affairs)
 providing accurate and regular statements to the customer.
 collecting cheques on behalf of the customers
 to give reasonable notice to the customer before closing a credit
account
 Abiding by the customer’s
mandate

 This duty requires that the banker must strictly comply
with the customer’s instructions to the banker as
contained in the mandate or as given from time to time.
Where the banker fails to abide by the customer’s
mandate the bank is held to be in breach of contract and
where the customer’s account has been wrongly debited,
the customer is entitled to have the debit reversed. Ligget
(Liverpool) Ltd v. Barclays Bank; Sampson Xeponu
Tommey v Standard Chartered Bank Ltd ; Ghana
National Association of Teachers v Standard Chartered
Bank,
 Honouring cheques properly
drawn

 Generally, a banker is under a duty to pay or honour cheques drawn on
him by his customer if the following conditions are satisfied:
 If there is a credit balance or overdraft on the customer’s account.
 b. If the cheque appears to be regular on the face of it and there is no legal
prohibition order on them preventing the payment of money out of the
customer’s account to third parties such as garnishee or bankruptcy orders.
 c. If the cheque comes in to the banker’s hands in the ordinary course of
business;
 Where a banker wrongfully dishonours a cheque, he is liable to the
customer in damages for breach of contract and in appropriate cases
defamation. The quantum of damages would depend on the harm suffered
such as the repute and position of customer. Nana Akwesi Osei v SCB
(US$12 Million) for breach of contract and defamation
 Duty of confidentiality

 keeping the customer’s transactions and information
confidential.
 At common law, subject to specific exceptions, a banker owes
its customers a duty of secrecy to keep confidential all matters
affecting the customer’s transaction with the bank. The
obligation extends to information obtained from other sources
than the customer’s actual account if the occasion upon which
the information was obtained arose out of the banking relations
of the bank and its customers.
 The leading case on this matter is the celebrated decision in
Tournier v Provincial and Union Bank of England. [1924] 1 KB
461.

 Codification of obligation

 The common law obligation of confidentiality has
been codified in a number of enactments in Ghana.
Borrowers and Lenders Act, 2008, Section 41, Non-
Bank Financial Institutions Act, 2008(Act 774)
Sections 8, 27, 34 and 36, Credit Reporting Act,
2007(Act 726), Section 146, of Banks and Special
Deposit-Taking Institutions Act, 2016(Act 930)
 Banks & SDTI

 Section 146(2) of Act 930 is to the effect a person with
access to the books, accounts, records, financial
statements or other documents, electronically or
otherwise, of a bank or specialised deposit-taking
institution shall not, during or after a relationship with
the bank or specialised deposit-taking institution, disclose
directly or indirectly to any person any information
related to the affairs of any of its customers including
deposits, borrowings or transactions or other personal,
financial or business affairs without the prior written
consent of the customer or the personal representative of
the customer.
 BoG

 Section 145(2) of Act 930 enjoins a “director, officer
or employee of the Bank of Ghana or any other
person appointed by the Bank of Ghana shall not,
during or after a relationship with the Bank of
Ghana, disclose directly or indirectly to any person
any information related to the affairs of the Bank of
Ghana, or any other bank, specialised deposit-taking
institution or financial holding company or of any of
its customers, which the person has acquired in the
discharge of duties or the performance of functions”.
Common law exceptions

 “At the present day, I think it may be asserted with
confidence that the duty [of non-disclosure] is a legal one
arising out of contract, and that the duty is not absolute,
but qualified. It is not possible to frame any exhaustive
definition of the duty. …On principle, I think that the
qualifications can be classified under four heads; a. where
disclosure is under compulsion by law, b. where there is a
duty to the public to disclose; c. where the interests of the
bank require disclosure; and d. where disclosure is made
by the express or implied consent of the customer.”
Bankes LJ Tournier
 Statutory exceptions

 (a) a customer who had been issued a credit card or charge card by
a bank, has had the card suspended or cancelled by the bank by
reason of default in payment, and the bank discloses information
related to the customer's name and identity, the amount of
indebtedness and the date of suspension or cancellation of the
credit card or charge card to other banks issuing credit cards or
charge cards in Ghana;
 (b) the customer is declared bankrupt in Ghana or, in the case of a
company, is being wound up;
 (c) the customer has passed away, testate or intestate, and the
information is required by the appointed personal representative
of the deceased or the testamentary executor solely in connection
with the succession estate;
 (d) civil proceedings arise involving the bank and the customer or
the account of the customer;
 Statutory exceptions

 (e) the information is required by a colleague in the
employment of the same bank in Ghana or an auditor or legal
representative of the bank who requires and is entitled to know
the information in the course of professional duties;
 (f) the information is required by another bank for the purpose
of assessing the credit-worthiness of a customer, if the informa-
tion is being sought for commercial reasons and is of a general
nature; (g) the bank has been served with a garnishee order
attaching moneys in the account of the customer; (h) any person
summoned to appear before a court or a Judge in Ghana and
the court or the Judge orders the disclosure of the information;
(i) the bank is required to make a report or provides additional
information on a suspicious transaction to the Financial Intelli-
gence Centre set up under the Anti -Money Laundering law in
force.
 Duty of due care and skill

 When it comes to contracts under which a skilled
professional person, such as a banker, agrees to render
certain services to his client for a fee, there is implied at
common law a term that he will render those services
with the exercise of reasonable skill and care. As is the
case in most claims in negligence, in deciding whether the
banker has exercised the necessary degree of care and
skill, the test is an objective one. The duty of care is also
not of an absolute nature; it is the degree of care which
would be exercised by a reasonable banker, or, put
otherwise, by an ordinary prudent banker.
 Met Capital v GT Bank

 The Plaintiff a customer of the Defendant bank instructed
the Bank to use its (US$550,000.00 ) as cash collateral for
another customer of the Bank. The Plaintiff customer
instructed the bank to move the said sum into the other
customer’s account but to block it. Against that the bank
was to issue guarantees on behalf of the other customer.
Upon expiration of the guarantee the bank was required
to transfer the sum of US$550,000 back into the Plaintiff
customer’s account. The bank failed to block the funds in
the other customer’s account and that customer
withdrew all the sums save US$227.69 and at the time of
the trial the account had only US$ 0.69. Plaintiff sued the
bank on several grounds including failure to exercise due
care and skill.
 Met Capital v GT Bank

 The Court found that the 1st Defendant did not
immediately transfer the Cash Collateral into a
pledged account nor did it block same in the 2nd
Defendant’s account, contrary to the clear and
unambiguous instructions of the Plaintiff. The Bank
therefore did not exercise the requisite skills and care
expected of a prudent banker in its dealings with
Plaintiff.
 Court ordered a refund of the US$550,000, interest
on same plus damages of GHS5Million.
 Providing regular and accurate
bank records

 A bank is required to provide regular statements to
the customer as agreed. Otherwise, the bank must
provide a statement of account within a reasonable
time and a statement of the balance on request.
 The bank must keep and provide accurate records.
 Tai Hing Cotton Mill Ltd v Liu Chong Hing Bank
Ltd [1986] AC 80.
 Status of bank statement-conclusive?


 Sowah J in Barclays Bank Ltd v Dabo
 "I do not think it can be dogmatically asserted that an entry made
in a pass book is in all cases conclusive and binding on the bank, or
conclusive or binding on the customer, but each case must be judged
on its own particular facts, although the customer in whose favour the
entry stands starts with the advantage that prima facie it is an
admission by the bank in his favour, which cannot in some cases be
rebutted.”
 See also Amalgamated Bank Ltd v Fraga Oil Ghana Ltd [2012] 48
G.M.J 149
 Barclays Bank v Dabo

 The defendant opened a bank account with the plaintiffs
and made an initial deposit of £G100. Subsequently the
amounts of £G200, £G150 and £G186 2s. were credited to
his account and the appropriate entries were made in his
ledger account and pass-book. However, these amounts
had in fact been deposited by one P. who discovered the
mistake when she came to withdraw the total. The
plaintiffs produced evidence to show that one B. a clerk in
their establishment, fraudulently entered the deposits in
the defendant's ledger account rather than P.'s. B. was
successfully prosecuted for his activities
 Barclays Bank v Dabo

 The defendant admitted that he did not make the three deposits
which were credited to his account and that he did withdraw
the total of £G536 2s. The plaintiffs submitted that the deposits
were entered into the defendant's ledger account by a mistake
of fact and they were therefore bringing this action to recover
the sum of £G536 2s. The defendant submitted that there was
no mistake of fact on the part of the bank; that even if there was
a mistake of fact, the defendant as a customer was entitled to
rely upon the entries made in his pass-book; that the plaintiffs
were estopped by their conduct from claiming the amount
involved since the defendant had paid the amount involved to
a third party; and the plaintiffs as the principal were to be held
responsible for the fraud of their servant since the acts were
done in the course of the servant's duties.
 Sowah J

 (2) An entry in a pass-book is not conclusive and binding
on the bank or the customer, rather each case must be
judged on its own peculiar facts. The speed with which
the defendant withdrew the amounts indicates that he
was aware that the money did not belong to him. .
 (3) The plaintiffs were not estopped from recovering the
amount because the defendant, even though he had
parted with the money, had done so to his benefit, not to
his detriment; he had paid a third party in satisfaction of a
debt which he in fact owed
 Estoppel

 Unless expressly agreed, a customer is not estopped
from challenging the accuracy of a bank statement.
Failure to scrutinize the bank statement does not so
bar him. Tai Hing Cotton Mill Ltd v Liu Chong Hing
Bank Ltd [1986] AC 80.
 Read BARCLAYS BANK (D.C.O.) v. DABO [1964]
GLR 637-643,
 Notice to terminate relationship

 In the absence of a special contract determining the
duration of a banking relationship, to give
reasonable notice to the customer before closing a
credit account. Reasonable notice is a question of fact
and depends on the circumstances. Prosperity
Limited v Lloyds Bank Ltd (1923), 39 TLR372
 Rights of the banker

 The bank’s rights include the following:
 A right to charge reasonable commission
 To exercise a lien where the bank collects cheques
into an overdrawn account.
 To use the customer’s money,
 Expect due care in the writing of cheques, to be
informed of forgeries on the account.
 Duties of the customer

 A customer of a bank also owes a duty of care to the
bank. However, this duty, unlike that of the banker,
is severely limited in scope. These duties are a duty
of care to inform the bank of forgeries, or fraud
relating to his account, of which he becomes aware.
Greenwood v Martin’s Bank [1933] AC 51
 Write cheques in a such way that they cannot be
easily altered London Joint Stock Bank Ltd v.
Macmillan & Arthur [1918] AC 777
 Duty to keep payment safe from
falling into the hands of miscreants

 Duty may extend to keeping other payment
instruments such as ATM Card, debit and credit
cards safe
 SAX Tsegah v Standard Chartered Bank
 TERMINATION OF THE
RELATIONSHIP

 The relationship may be terminated in accordance with its
terms.
 Death or bankruptcy of the customer
 Death operates to terminates the bank’s mandate to
operate the account and cheques must be returned
marked ‘drawer deceased’ after the bank has received
notice of the customer’s death. If the customer had only a
sole account, any credits received after the notice of death
should be placed to the credit of a new account in the
name of Personal Representatives of X Deceased’
 Liquidation of a corporate customer
 Liquidation of the bank