Former Trade Minister, Ekwow Spio-Garbrah has commended the Bank of Ghana for increasing the minimum capital requirement of commercial banks to 400 million cedis.

He argues that this will strengthen Ghana’s banking industry.

The Bank of Ghana on September 11, 2017 announced the new minimum capital requirement for banks.

The figure has been reviewed upwards from 120 million cedis to 400 million cedis.

This represents 233 percent increase from the previous figure.

According to the central bank, the commercial banks have up to December 2018 to meet the new capital requirement.

Mr. Spio-Garbrah’s comment also comes at a time that some financial observers believe the move will be unfortunate for some local banks as they risk being taken up by larger foreign ones.

Such analysts have also contended that some indigenous banks may not be able to meet the new requirement.

Mr. Spio Garbrah said on Citi Business News the move by the BoG will reduce the number of banks in Ghana.

“400 million cedis is less than one hundred million dollars and in a country of Ghana’s size and GDP size, many people have wondered why we need over thirty banks mostly commercial ones and why almost all these banks should be universal banks,” he said.

Mr. Spio Garbrah however believes banks must be made to specialize in designated services to enhance their productivity.

“So many of us have a very strong view that there should be greater specialization among our banks. We need banks which are specifically designated to areas such as agriculture…You need banks which have a special mandate,” he added.