ABSTRACT
Prudential supervision of financial institutions is a prerequisite to effective fiscal and corporate governance. The reserve or central bank exercises direct control over activities of commercial, merchant and to some extent even development banks operating in the country. The overall objective of these powers is to ensure prudential supervision and effective banking regulation. Prudential supervision is central to fiscal stability in the region. The assumption of control of affairs of a licensed financial institution means that the reserve or central bank or any person appointed by it may carry on all or part of the business hitherto undertaken by that licensed financial institution. Controllership over the affairs of a bank can be terminated by the Minister of Finance on the advice of the reserve bank. This is distinct from terminating the appointment of a controller, which may simply be executed by the reserve bank but with the consent of the Minister of Finance.
