Industry guide
Banking Industry Information
Overview
The financial system at a glance
Banks sit at the centre of the financial system, connecting savers, borrowers and the payments that keep the economy moving.
Banks perform three functions that few other institutions can combine. They accept deposits and keep them safe and accessible; they turn those deposits into loans for households, businesses and government; and they operate the accounts and payment services through which salaries are paid, goods are bought and trade is settled.
Because banks hold the public’s savings and lend them on, their soundness matters well beyond their own shareholders. That is why banking is one of the most closely regulated activities in any economy, and why confidence in the system is treated as a public good.
In The Gambia, banks operate alongside a wider range of financial institutions, each serving different needs and subject to its own rules. The national currency is the Gambian dalasi (GMD), and banks also provide foreign-currency services for trade, remittances and travel.
Regulation
How banks are regulated
The Central Bank of The Gambia licenses, regulates and supervises banks and conducts monetary policy. Its powers and objectives are set out in the Central Bank of The Gambia Act 2018, while the Banking Act 2009 provides the legal framework for banking business. Regulation covers four broad areas.
Licensing
No institution may carry on banking business in The Gambia without a licence from the Central Bank. Applicants must demonstrate adequate capital, a sound business plan, fit and proper owners, directors and senior managers, and appropriate governance and risk controls. Taking deposits from the public without a licence is unlawful.
Prudential supervision
Once licensed, banks must meet continuing prudential requirements designed to keep them solvent and liquid. These include minimum capital, limits on large exposures and related-party lending, rules for classifying and provisioning for loans, and requirements for corporate governance, internal control and audit. The Central Bank monitors compliance through regular returns and on-site examinations.
Anti-money laundering and counter-terrorist financing
Under the Anti-Money Laundering and Combating of Terrorist Financing Act 2012, banks must identify and verify their customers, understand the purpose of business relationships, keep records, monitor transactions and report suspicious activity to the Financial Intelligence Unit. These obligations protect the integrity of the financial system and its access to international payment networks.
Consumer protection
Banks are expected to treat customers fairly, disclose charges and terms clearly, protect customer information and handle complaints promptly. A customer with a complaint should first raise it with the bank concerned; where it remains unresolved, the customer can seek guidance from the Central Bank of The Gambia.
Who does what
Institutions in the system
Central Bank of The Gambia
The monetary authority and regulator of the financial system. It licenses and supervises banks, conducts monetary policy and oversees the payments system.
Commercial banks
Licensed institutions that accept deposits, extend credit and provide payment, foreign-exchange and trade-finance services to individuals, businesses and government.
Islamic banks
Licensed banks that operate in line with Islamic principles, earning returns through trade, leasing and profit-sharing rather than interest.
Microfinance institutions and credit unions
Providers of savings and small-scale credit, often serving communities and small enterprises with limited access to banks. They operate under a regulatory framework distinct from that for banks.
Mobile money and e-money providers
Firms that store value and enable payments and transfers through mobile phones and agents. They are not banks and do not lend deposits on as banks do.
Financial Intelligence Unit
The national authority that receives and analyses suspicious transaction reports from banks and other reporting entities, and shares intelligence with competent authorities.
The business of banking
How a bank works
- 1
Taking deposits
Customers place money in current, savings and fixed-deposit accounts. Deposits are the main source of funds a bank uses to lend and invest.
- 2
Lending and investing
The bank lends to households and businesses and invests in assets such as government securities, earning interest or, for Islamic banks, profit.
- 3
Managing risk
The bank assesses borrowers, takes collateral, diversifies its lending and holds liquid assets so it can meet withdrawals and absorb losses.
- 4
Moving money
Through accounts, cards, digital channels and correspondent banks, the bank settles payments for customers at home and abroad.
- 5
Earning and holding capital
Income from lending, investments and fees covers costs and losses. Profits build capital, the buffer that protects depositors if things go wrong.
Reading the numbers
Key indicators explained
Sector statistics are usually described through a common set of indicators. Each tells part of the story; they are most useful read together and over time.
- Indicator
- Total assets
- What it measures
- The combined value of everything banks own, including loans, securities, cash and fixed assets.
- Why it matters
- Indicates the size of the banking sector and its weight in the economy.
- Indicator
- Deposits
- What it measures
- Money placed with banks by individuals, businesses and institutions.
- Why it matters
- Shows public confidence in banks and the main funding available for lending.
- Indicator
- Loans and advances
- What it measures
- Credit extended by banks to customers, net or gross of provisions.
- Why it matters
- Measures how far banks are financing households and businesses.
- Indicator
- Non-performing loan (NPL) ratio
- What it measures
- Loans on which repayments are significantly overdue, as a share of total loans.
- Why it matters
- A key gauge of credit quality and potential losses.
- Indicator
- Capital adequacy ratio
- What it measures
- Regulatory capital as a share of risk-weighted assets.
- Why it matters
- Shows banks’ ability to absorb losses while continuing to operate.
- Indicator
- Liquidity ratio
- What it measures
- Liquid assets as a share of short-term liabilities, chiefly deposits.
- Why it matters
- Indicates whether banks can meet withdrawals and obligations as they fall due.
- Indicator
- Return on assets (ROA)
- What it measures
- Net profit as a share of average total assets.
- Why it matters
- Reflects how efficiently banks use their balance sheets to generate earnings.
- Indicator
- Return on equity (ROE)
- What it measures
- Net profit as a share of average shareholders’ equity.
- Why it matters
- Shows the return to owners, and the capacity to build capital from earnings.
Official statistics on the banking sector are published by the Central Bank of The Gambia. Always note the source and reporting period when quoting a figure.
Glossary
Banking terms A–Z
A
- AML/CFT
- Anti-money laundering and combating the financing of terrorism: the laws, controls and reporting obligations that prevent the financial system being used for crime.
C
- Capital adequacy ratio
- A bank’s regulatory capital measured against its risk-weighted assets; a core test of its ability to absorb losses.
- Collateral
- An asset pledged by a borrower as security for a loan, which the lender may realise if the loan is not repaid.
- Correspondent bank
- A bank, usually abroad, that holds accounts for and provides services to another bank, enabling international payments and trade.
- Credit reference bureau
- A body that collects information on borrowers’ credit history so lenders can assess repayment risk.
- Current account
- A transactional account for everyday payments and withdrawals, typically offering a cheque book, card or digital access.
D
- Dalasi (GMD)
- The currency of The Gambia, issued by the Central Bank of The Gambia.
- Deposit
- Money placed with a bank by a customer, which the bank is obliged to repay on demand or on agreed terms.
F
- Fixed deposit
- A deposit held for an agreed term, usually at a higher return than a savings account, with restrictions on early withdrawal.
I
- Interest rate
- The price of money: the percentage charged on a loan or paid on a deposit over a period.
K
- KYC (Know Your Customer)
- The process by which a bank identifies and verifies its customers and understands the nature of their business.
L
- Liquidity
- The ability to meet payment obligations as they fall due, or the ease with which an asset can be turned into cash.
- Loan-to-value
- The size of a secured loan as a proportion of the value of the asset pledged as collateral.
M
- Mobile banking
- Access to bank accounts and services through a mobile phone application or short-code service.
N
- Non-performing loan
- A loan on which the borrower has failed to make scheduled repayments for a defined period, or is unlikely to repay in full.
O
- Overdraft
- A facility allowing a customer to draw more than the balance on a current account, up to an agreed limit.
P
- Prudential regulation
- Rules designed to keep financial institutions safe and sound, covering capital, liquidity, risk management and governance.
R
- Remittance
- Money sent by an individual to another person, often from abroad to family at home.
S
- Savings account
- An account for holding funds over time that typically earns a return, with fewer transaction features than a current account.
T
- Treasury bill
- A short-term debt security issued by government to raise funds, widely held by banks as a liquid investment.
Questions
Common questions about the sector
Is my money safe in a bank?
Licensed banks are required to hold capital and liquid assets, manage risk and submit to regular supervision by the Central Bank of The Gambia. These safeguards are designed to protect depositors. No financial institution is entirely free of risk, so customers should deal only with licensed institutions and keep their account details and passwords secure.
Who regulates banks in The Gambia?
The Central Bank of The Gambia licenses, regulates and supervises banks. The Gambia Bankers’ Association is an industry association representing its member banks; it is not a regulator and does not license or supervise institutions.
What is the difference between a bank and a mobile money provider?
A bank takes deposits and lends them on, and is subject to full prudential regulation, including capital and liquidity requirements. A mobile money or e-money provider stores value and enables payments and transfers, but does not lend customers’ funds. The two often work together, for example when customers move money between a bank account and a mobile wallet.
Where can I find official data on the banking sector?
The Central Bank of The Gambia publishes official statistics and reports on the financial system at https://www.cbg.gm. The Association also publishes industry statistics and reports, each labelled with its source and reporting period.
How are interest rates set?
The Central Bank sets its policy rate as part of monetary policy, which influences the general level of interest rates in the economy. Each bank then sets its own lending and deposit rates, taking account of its cost of funds, the risk of the borrower, the term of the loan and competition. The Association does not set or recommend rates.
Explore the data
Sector statistics, with sources and reporting periods, are published alongside the Association’s reports and policy papers.
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