While questions are being raised about the rationale of government institutions depositing their money in universal banks as against the Bank of Ghana (BoG), it has emerged that one critical motivation for this action is the lure of financial gains offered by the banks.

Investigations by The Finder has revealed that any individual or group of persons who facilitates the opening of accounts in commercial banks receives a 3% fee of the total cash deposited in the account, often known as finder’s fee.

According to information, persons with influence in fully funded organs of government, like the Ministries, Departments, Agencies, Foreign Missions, as well as the partially funded ones like teaching hospitals, medical centres and tertiary institutions, lobby for their institutions to bank with particular commercial banks to enable them receive the 3% finder’s fee.

Accounts executives of commercial banks use the finder’s fee to lure influential persons in government institutions to facilitate the opening of accounts in their banks, and this explains the numerous accounts operated by government institutions.

Consequently, some financial analysts have charged government to order Ministries, Departments and Agencies (MDAs), as well as agencies that are fully or partially self-funding to deposit all their monies at BoG or face sanctions.

Some commercial banks are holding government’s free float money at zero to minimum interest rates and are investing such monies in Treasury Bills at higher interest rates.

What this means is that government is borrowing its own money which is being held by commercial banks and paying higher interest rates on Treasury Bills to the beneficiary banks.

The financial analysts, who did not want to be named, advised government to order all MDAs to pay government revenues, incomes and other receipts into a Treasury Single Account (TSA) at BoG as a means of centralising deposits.

All receipts due to government or any of its agencies are paid into TSA or designated accounts maintained and operated in the BoG.

For any agency that is fully or partially self-funding, Sub-Accounts linked to TSA are to be maintained at the Central Bank and the accounting system will be configured to allow them access to funds based on their approved budgetary provisions.

The financial analysts explained that this would reduce the interests on government’s domestic borrowing as it would reduce the net amount to be borrowed, as well as reduce interest on expenses.

According to the proponents, such a policy would end the previous public accounting situation of several fragmented accounts for government revenues, incomes and receipts. The numerous accounts result in the loss or leakages of legitimate income meant for the government.

A TSA is a unified structure of government bank accounts enabling consolidation and optimal utilisation of government cash resources.

It is a bank account or a set of linked bank accounts through which the government transacts all its receipts and payments and gets a consolidated view of its cash position at any given time.

The TSA policy is meant to plug leakages and reduce wastage in government finance.

Liquidity crisis in banks

Its implementation is likely to cause a liquidity crisis in banks, as the public sector fund, currently in the vaults of banks, would have to be lodged at the Bank of Ghana.

The development means that banks would lose the said amount to the Central Bank if the government enforces the directive.

Affected institutions

The policy should apply to fully funded organs of government like the Ministries, Departments, Agencies, Foreign Missions, as well as the partially funded ones like teaching hospitals, medical centres and tertiary institutions.