{"id":37744,"date":"2023-06-05T09:45:29","date_gmt":"2023-06-05T09:45:29","guid":{"rendered":"https:\/\/www.africa-press.net\/south-sudan\/all-news\/broke-commercial-banks-risk-closure-imf-report"},"modified":"2023-06-05T09:55:14","modified_gmt":"2023-06-05T09:55:14","slug":"broke-commercial-banks-risk-closure-imf-report","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/south-sudan\/all-news\/broke-commercial-banks-risk-closure-imf-report","title":{"rendered":"Broke commercial banks risk closure: IMF report"},"content":{"rendered":"

Africa-Press – South-Sudan. <\/strong><\/span>Undercapitalised commercial banks in South Sudan now risk closure due to the ongoing scrutiny by the Bank of South Sudan to strengthen the banking sector, a report from the International Monetary Fund (IMF) has revealed.<\/p>\n

The IMF report No. 23\/108, dated March 1, 2023, noted that the said banks account for about \u201csix percent of system assets and 12 percent of deposits\u201d.<\/p>\n

\u201cOver the coming months, the BoSS will lay out plans to address the undercapitalization of the domestic banking sector (MEFP). Several licenced commercial banks, accounting for six percent of system assets and 12 percent of deposits, appear to be undercapitalised,\u201d the report read.<\/p>\n

The lender warned that \u201cundercapitalization is unhealthy for financial development and affects the capacity of the banking sector to absorb shocks in economic growth and development.\u201d<\/p>\n

It added that the bank had already taken the necessary measures by revoking the licences of \u201ctwo inactive domestic banks\u201d that were yet to start operations.<\/p>\n

\u201cIt is also reviewing the licences of inactive banks that are critically undercapitalised and have ceased operations,\u201d the report elaborated.<\/p>\n

Future plans<\/b><\/p>\n

It stressed that the BoSS Board would begin publishing audited financial statements after the strategy for addressing undercapitalization is approved in June 2023.<\/p>\n

\u201cBy June 2023, the BoSS Board will approve a time-bound strategy for addressing banking sector undercapitalization as one of the SBs of the PMB,\u201d the IMF noted in the report.<\/p>\n

\u201cThe BoSS will proceed to enforce the publication of audited financial statements by all commercial banks operating in South Sudan, and, to enhance transparency, it has also commenced the regular publication of quarterly Financial Soundness Indicators (FSI) for South Sudan\u2019s banking sector on its website.\u201d<\/p>\n

But a news report published by The East African on June 3, 2023, stated that BoSS would phase out low-denomination banknotes, reduce cash payments, and prioritise payments through bank accounts.<\/p>\n

\u201cJuba is also seeking to reduce the cost of cash transactions by phasing out low denomination banknotes and reduce the cash reliance of the economy through supportive policies, including paying civil servants through bank accounts,\u201d wrote The East African.<\/p>\n

\u201cThe Bank of South Sudan (BoSS) has disclosed in the International Monetary Fund (IMF) Country Report No. 23\/108 dated March 2023 that plans are underway to implement an insurance plan for bank depositors as part of a wider East African integration agenda, seeking to protect account holders and boost confidence in the regional banking sector.\u201d<\/p>\n

False report<\/b><\/p>\n

But a reliable source from the Bank of South Sudan who spoke anonymously said such reports were not true as the governor of the Bank of South Sudan (BoSS) had not said anything like that.<\/p>\n

\u201cI am not sure about this. I don\u2019t know their source of information because the source of information is the governor; if the governor had said this, this could be true,\u201d denied the anonymous source.<\/p>\n

Importance of capitalisation<\/b><\/p>\n

In June 2023, Dr. Moyi Harry Ruben, the acting managing director of Ivory Trading and Investment Company, issued similar sentiments that banks that lack capital are economic baggage.<\/p>\n

\u201cBank capital risk should not be treated lightly because it may affect the whole economy. In other words, excess credit, interest risk, and operational risk could result in a bank\u2019s having insufficient capital to meet losses resulting from loan losses. It may even run short of cash in some cases,\u201d Moyi said.<\/p>\n

He stressed that the Central Bank imposed the policy of adequate capital so that it could defend the economy.<\/p>\n

\u201cThe important reason why the Central Bank imposes capital adequacy is simply to safeguard the economy and the customer\u2019s deposits, prevent panic withdrawals that may cause a lack of confidence in the banking industry in the country, and influence the functions of a discount window where banks can borrow money from and safeguard confidence in the banking system,\u201d he added.<\/p>\n

\u201cBanks need to have several reserves for prudential purposes. If a bank fails to meet its minimum desired level of reserve assets, it may have to turn away customers, loan seekers, and other obligations that fall due.\u201d<\/p>\n

Accounts closure<\/b><\/p>\n

In January 2023, the Bank of South Sudan (BoSS) issued an order for the closure of the bank accounts of public institutions like ministries and commissions as well as state governments in commercial banks, asking for the list of exempted banks to be submitted by January 27, 2023.<\/p>\n

\u201cIn light of the above, the BoSS is hereby directing all commercial banks to close all bank accounts of central government institutions (ministries and commissions) and state governments except donor-funded project accounts of these institutions,\u201d the BoSS said, demanding that the names of these exempted banks be submitted no later than Friday, January 27, 2023.<\/p>\n

Source: The City Review South Sudan<\/b><\/p>\n

For More News And Analysis About South-Sudan<\/a> Follow Africa-Press<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Africa-Press – South-Sudan. Undercapitalised commercial banks in South Sudan now risk closure due to the ongoing scrutiny by the Bank of South Sudan to strengthen the banking sector, a report from the International Monetary Fund (IMF) has revealed. The IMF report No. 23\/108, dated March 1, 2023, noted that the said banks account for about […]<\/p>\n","protected":false},"author":84,"featured_media":37743,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,5],"tags":[234,265,2893,3504,2632,233,4147],"class_list":["post-37744","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-economy","tag-africa-press","tag-africa-press-south-sudan","tag-bank-of-south-sudan","tag-boss","tag-imf","tag-south-sudan","tag-undercapitalization"],"yoast_head":"\nBroke commercial banks risk closure: IMF report - South Sudan<\/title>\n<meta name=\"description\" content=\"Undercapitalised commercial banks in South Sudan now risk closure due to the ongoing scrutiny by the Bank of South Sudan ...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.africa-press.net\/south-sudan\/all-news\/broke-commercial-banks-risk-closure-imf-report\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Broke commercial banks risk closure: IMF report\" \/>\n<meta property=\"og:description\" content=\"Undercapitalised commercial banks in South Sudan now risk closure due to the ongoing scrutiny by the Bank of South Sudan ...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.africa-press.net\/south-sudan\/all-news\/broke-commercial-banks-risk-closure-imf-report\" \/>\n<meta property=\"og:site_name\" content=\"South Sudan\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/AfricaPressTunisiaa\" \/>\n<meta property=\"article:published_time\" content=\"2023-06-05T09:45:29+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-06-05T09:55:14+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/static.africa-press.net\/south-sudan\/sites\/32\/2023\/06\/sm_1685946271.749374.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"720\" \/>\n\t<meta property=\"og:image:height\" content=\"479\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"cfeditoren\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"cfeditoren\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.africa-press.net\/south-sudan\/all-news\/broke-commercial-banks-risk-closure-imf-report#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.africa-press.net\/south-sudan\/all-news\/broke-commercial-banks-risk-closure-imf-report\"},\"author\":{\"name\":\"cfeditoren\",\"@id\":\"https:\/\/www.africa-press.net\/south-sudan\/#\/schema\/person\/068c7ab4e9634ae78ec5d54ec46598bb\"},\"headline\":\"Broke commercial banks risk closure: IMF report\",\"datePublished\":\"2023-06-05T09:45:29+00:00\",\"dateModified\":\"2023-06-05T09:55:14+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.africa-press.net\/south-sudan\/all-news\/broke-commercial-banks-risk-closure-imf-report\"},\"wordCount\":789,\"commentCount\":0,\"image\":{\"@id\":\"https:\/\/www.africa-press.net\/south-sudan\/all-news\/broke-commercial-banks-risk-closure-imf-report#primaryimage\"},\"thumbnailUrl\":\"https:\/\/static.africa-press.net\/south-sudan\/sites\/32\/2023\/06\/sm_1685946271.749374.jpg\",\"keywords\":[\"Africa Press\",\"Africa Press-South-Sudan\",\"Bank of South Sudan\",\"BOSS\",\"IMF\",\"South-Sudan\",\"Undercapitalization\"],\"articleSection\":[\"all news\",\"economy\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.africa-press.net\/south-sudan\/all-news\/broke-commercial-banks-risk-closure-imf-report#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.africa-press.net\/south-sudan\/all-news\/broke-commercial-banks-risk-closure-imf-report\",\"url\":\"https:\/\/www.africa-press.net\/south-sudan\/all-news\/broke-commercial-banks-risk-closure-imf-report\",\"name\":\"Broke commercial banks risk closure: IMF report - 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