Supervision of a large number of RMFIs is costly relative to their potential impact on the financial system (about 7% of assets), and the Bank of Ghana has adopted a number of strategies to cope with its limited supervision capacity: raising reserve requirement for RCBs to as high as 62% drastically raising the minimum capital requirement for NBFIs and permitting self-regulation of credit unions by their apex body. The informal sector is dominated by a variety of savings-based methodologies, both individual and group. Small unit Rural and Community Banks (RCBs) are accommodated in the Banking Act savings and loan companies in the Non-Bank Financial Institutions (NBFIs) Law and credit unions under a new law being prepared to recognize their dual nature as cooperatives and financial institutions. The result – though not entirely by conscious design – is several tiers of different types of RMFIs with a strong savings orientation and a much greater role of licensed institutions relative to NGOs than is found in many countries. Legislation and regulations governing rural and micro finance institutions (RMFIs) in Ghana have evolved with the market, both opening up possibilities for new types of institutions and tightening up to restrain excessive entry and weak performance in the face of inadequate supervision capacity.
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