Rural Banks in the north show disinterest in SIF micro-credits

Eremon (U/W), Feb. 11, GNA - Rural banks in the Northern, Upper East and Upper West regions are refusing to assess a 20 billion-cedi fund set aside by the Social Investment Fund (SIF) for disbursement through these banks and some non-financial institutions to vulnerable groups in rural communities.

The banks are reluctant to draw from the fund to finance these groups because the 10 per cent interest on the loans pegged by SIF was too small and they preferred an interest rate of 25 per cent to compensate for the large volume of work involved in the exercise. Mr Kwame Obeng Nti, the Zonal Officer of SIF in charge of the three northern regions, said this in an interview with the Ghana News Agency on Friday.

Mr Nti said the banks were unwilling to assess the fund because they had adequate funds to loan to the public as a result of the free falling Treasury bill rate that has made it unrewarding for them to invest their money in that security.

He expressed regret that since the scheme was introduced by SIF in 2003, rural banks in the north assessed only four per cent. "Considering the fact that the three regions are the poorest in the country one would have thought that such a scheme will readily be embraced by the rural banks in the area without any impediments but that has not been the case".

Mr Nti said SIF has decided to give banks logistical support in the form of motorbikes to monitor beneficiary groups and also to bear the cost of training of potential beneficiaries of the scheme as a way of motivating them to accept the ten per cent interest on loans.