Minimum Paid up capital of commercial banks is to go up 68 percent. Effective next year 2025, all banks operating in the economy would begin in graduated fashion - over the next 3 years - to arrange for infusion of additional NLe185 million to raise up their base to NLe270 million.

Minimum paid up capital of commercial banks presently stands at NLe85 million. The Bank of Sierra Leone in announcing this directed that the increment should be done over a 3-year period and warned that banks must not recourse to shareholders’ fund and also not appropriate their statutory reserves during the stipulated period. The minimum paid-up capital requirement for Merchant Banks (Investment Banks) has also been pegged at NLe270 million.

“Commercial banks shall be required to comply with this new requirement in a graduated manner over a three year period viz: total minimum paid-up capital of NLe122,000,000 by end December 2025; NLe196,000,000 by end December 2026; and NLe270,000,000 by end December, 2027’’ BSL added that the minimum capital requirement will be based on paid-up capital and not shareholders' funds. However, banks could be allowed to utilize their revenue reserves or retained earnings. New banking licenses for investors looking to establish their commercial banks however would not benefit from the 3-year window as they would be required to pay up fully the NLe270 million before getting their operational licenses.

New investors, BSL sources told FS shall be required to meet the new minimum paid-up capital requirement at the licensing and entry stage. “This would require a bullet payment of the new minimum paid-up capital, in full”.

This development would usher in renewed interest in both individual and portfolio investors who would have the opportunity of investing in the banks. The BSL allows for the banks to raise fund for this new capital requirement through private placement or by offering shares for subscriptions. The move also has the potential to create a bull run on the capital market through open subscription for share offers and Initial Public Offers (IPO).