Rural banks call on BoG to be considerate with penalty imposition

Mr Simon Nero Davor, Volta Regional President of the Association of Rural Banks (ARB), has appealed to the Bank of Ghana (BoG) to be considerate in penalties it imposes on rural and community banks.

He said if the penalties being imposed are not paid, it could lead to the collapse of rural banks with social impacts on rural economies. Mr Davor made the appeal at the 16th National Managers’ conference of Rural and Community Banks in Ho.

The conference was held under the theme: “Making greater impact in the rural industry through innovation and collaboration for sustainable growth.”

Mr Davor said a good number of rural and community banks were facing challenges and urged the BoG to devise means of reviving such banks instead of closing them down, which could cause loss of deposits by customers, loss of jobs and rural enterprise collapse.

He also appealed to central government to channel funds such as the District Assembly Common Fund through rural and community banks instead of universal banks, many of which are not located in the districts.

“It is disheartening to see government channeling all its funds especially the DACF through the universal banks but anytime these assemblies need support for national events (farmers day), they write to RCBs for assistance. This is unfair. Government should pass all funds to assemblies through RCBs to keep us in business to support the assemblies,” Mr Davor said.

He also urged government to pay contractors so they could service their non-performing loans to “give lifeline to troubled RCBs.”

Mr Davor said a major challenge facing RCBs was managers of those banks giving loans to themselves either personally or through third party and cautioned them against the practice.   

Mr Kofi Amoa-Awuah, Head of Other Financial Institutions Supervision Department, Bank of Ghana, in a speech read on his behalf, said RCBs had contributed meaningfully to the lives of people in communities in terms of health, education, employment and businesses and said the penalty appeal would be considered.

He asked RCBs to embrace innovation and build strong partnership with all stakeholders to enhance service delivery and increase their clientele.

Mr Amoa-Awuah said though the total assets of RCBs was GH¢3.44 billion as at June 30, this year and constituted 3.4 percent of total assets of the entire banking industry in the country, they must endeavor to meet all regulatory requirements to avoid sanctions by BoG.

Mr Kojo Mattah, Managing Director, ARB Apex Bank Limited, asked RCBs to introduce innovation into the rural banking space, build a strong brand and become more customer oriented with tailored products for convenience and satisfaction.

He said there is the need for collaboration among RCBs to sustain growth through same stance in marketing and promotion of products and services.

Mrs Comfort Owusu, Acting Executive Director, Association of Rural Banks, said working collaboratively could position RCBs to “obtain greater resources, recognition and reward,” saying, “if you want to walk faster, walk alone but if you want to go farther, walk in a group.”