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how are the challenges faced by financial system addressed by the banks and specialized deposit taking...

how are the challenges faced by financial system addressed by the banks and specialized deposit taking institutions Act 2016(Act 930)

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The function of the bank is heavily regulated from the commencement of the banking commercial enterprise, which is licensing, and often in the course of the operations of the financial institution.

It is difficult of the role played via banks as financial intermediaries In fact, a bank’s susceptibility to runs is the main motive why deposit protection is necessary. In order for banks on the way to serve their customers, they want to keep a best balance between customers’ deposits and those they've given out as loans.

Large Firms can forecast their cash needs and have a high liquidity position. But banks can't do the same as their loan processes continues throughout the year round. Therefore, banks primarily live on depositors who comes to banks to deposit cash money. If depositors in a single day determine to withdraw the entire amount in from their account, the bank goes on a state of shock and it is often seen that they are resistant to allow that.

This goal of the Act become a noble one however one wonders why the framers either by using coincidence or intentionally determined to deviate absolutely from that path.

The Act has a scheme of insurance to protect the deposits of small depositors. Section 3 of Act 931 which offers for the object of the Scheme states that it's far to defend small depositors from events which are insurable under the Act, and to aid the improvement of a safe, sound and stable financial marketplace.

Actually, the overall objective of the Act must have had a non-course of action weight to the citizen as a essential point, albeit one may additionally contend that a store security and a loose from any capability harm budgetary market are at the entire focusing on the guarantee of the citizen. It is glaringly the little traders attention by Ghana Deposit Protection Act, 2016, Act 931 and loose from any hazard industrial center don't attention on the citizen but are each for authorities advantage.

However, banks should be allowed to determine whether they need to enroll in this same or not. In some jurisdictions, the due to the forces on the marketplace, their membership , has turn out to be compulsory due to the fact depositors are informed which of the monetary establishments are member of DPC and which ones aren't and consequently Financial Institutions are left with no choice than to emerge as participants of DPC and boldly promote it their membership.

The banks in Ghana concerning deposits has now not yielded maximum results. The legal gadget in Ghana is susceptible and concern to manipulation from both the authorities and the opinion leaders. Investors/depositors aren't covered in any such scenario to invest their cash. Good accounting methods, auditing and different checks and balances might ensure easy interpretations of the law. Enforcing policies to guide and guard depositors would provide a safe environment for depositors to boom their financial savings


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