10:33 a.m. Apr 28, 1999 Eastern

By Reynt-Jan Sloet van Oldruitenborgh

ACCRA, April 28 (Reuters) - Ghana is to revamp its banking law following liberalisation of the banking sector and a flood of new products, according to a senior Central Bank official.

``There are some areas that we need to tighten up,'' the Director of the Banking Supervision Department of the Bank of Ghana, E. Asiedu-Mante, told Reuters in an interview.

Ghana's 1989 Banking Law allows any Ghanaian to open a bank, provided the new bank has capital of at least 200 million Cedis ($85,000) and Central Bank clearance.

``Now that the system is completely deregulated there is much more competition. The sector is computerising and a lot of product innovations have come about,'' Asiedu-Mante said.

The 1989 law includes requirements on loan and other ratios but is vague on sanctions for banks not respecting them.

``The head of supervison has to be empowered to take immediate action on banks which do not meet the required ratios,'' Asiedu-Mante said.

``The law says that a bank cannot grant more than a certain percentage of its loans or guarantees to one customer. Occasionally banks exceed this limit but the law is not clear on what should be done,'' he said.

Asiedu-Mante's department is putting together draft amendments. He said that government expected to submit the amendments to parliament by the end of the year.

``The government is very serious about this bill,'' a colleague at the Banking Supervision Department said later.

That being the case, the bill should pass without difficulty as the ruling party of Ghana's President Jerry Rawlings has a large majority in parliament.

The banking sector in Ghana comprises seven commercial banks, 10 merchant and development banks and 133 rural and community banks.

The government has not made much headway in privatising state-owned banks. They were once three. Only the SSB-Bank, the former Social Security Bank, has been privatised.

A strategic investor for the National Investment Bank has not been found yet. The privatisation of the Ghana Commercial Bank (GCB) was cancelled when the Malaysian investor who had signed a draft agreement of intent in 1997 withdrew.

``Ghana Commercial Bank has a management problem, which has caused some damage there. Until recently they did not even have a board,'' said Asiedu-Mante.

GCB, Ghana's largest commercial bank, recently appointed a new managing director -- its third in six months.

($-2,353 Cedi)