Dr Daniel Osabutey, a Senior Lecturer at the Accra Technical University, has commended the Bank of Ghana (BOG) for its directive requiring the conversion of all rural banks to banks by March 31, 2026.

Dr Osabutey described the reform as timely and necessary, noting that it addressed long-standing structural weaknesses in the sector while promoting financial stability and inclusion as well as restoring confidence in the country’s microfinance sector.

According to him, the directive introduced stronger regulatory standards that were expected to improve governance across institutions, explaining that higher minimum capital requirements, clearer ownership structures, and enhanced supervision would help reduce systemic risks and protect depositors.

He said these measures were also expected to address persistent issues of undercapitalization that had affected many rural banks over the years and added that the reform provided structured options for struggling institutions, including mergers, acquisitions, and supervised asset transfers.

Dr Osabutey added that the transition to community banks would expand financial inclusion by creating a more unified banking model that served both rural and urban populations and stated that this approach would improve the mobilisation of local savings and increase access to credit for micro, small, and medium enterprises, thereby supporting economic activity at the grassroots level.

He added that the requirement for a minimum of 30 per cent of community ownership was particularly significant, as it would strengthen accountability and rebuild trust between financial institutions and the communities they serve.

He said the reform also assigned a more prominent role to ARB Apex Bank Limited, which would act as a shared services provider for the sector, saying that this would reduce operational costs through centralised systems such as liquidity support, digital platforms, and payment infrastructure.

He said this development would also accelerate digital transformation and enhance the competitiveness of smaller institutions, adding that streamlining the sector would improve the effectiveness of monetary policy and financial inclusion programmes at the national level.

Dr Osabutey said the transition might present challenges, including potential difficulties in raising capital, restructuring ownership, and managing institutional mergers, and warned that without effective communication, customers could experience temporary service disruptions during the transition period.

He emphasised the need for a phased and well-coordinated implementation process and called for strong regulatory guidance from the Bank of Ghana, capacity-building support from ARB Apex Bank, access to transitional financing, and transparent engagement with customers.