Banking Sector Cleanup: Rural Banks to be reformed- BoG
The Bank of Ghana will soon hit the rural banks with a reformation exercise as part of its strategic approach to sanitizing the banking sector. This exercise will be taken in all the one hundred and forty-four rural and community banks across the country.
Detailing how the exercise will be taken, First Deputy Governor of the Bank of Ghana, Dr Maxwell Opoku Afari said the a reformation plan will be developed to guide the process.
He told a congregation at the 7th Annual General Meeting of the Association of Rural Banks in Takoradi that, a total of one hundred and fourteen rural banks have successfully met the regulator’s paid-up capital of one million Ghana Cedis.
Thirteen of the total number of rural banks in the country are however struggling to satisfy this requirement. These rural banks have in the range of GHC 500,000.00 and just about GHC1,000,000.00 of the required amount.
He assessed that one hundred and thirty rural and community banks constituting 90.3% in the country have complied with the minimum primary reserve capital requirement of 8%, with an average primary reserves of 18.2%.
Dr. Maxwell Opoku Ofori observed that some challenges exist amidst the gains made by the rural banks, that he added will require some correction to reinforce the sector.
“The Bank of Ghana is working together with the Ministry of Finance and the APEX Bank to implement a reform plan that seeks to address the current challenges facing the rural and community banks.
He noted that the reform will focus on their corporate governance structure, capitalisation, forex management among others.
“By the time that is finished, we will end up having a set of rural banks are also strong, solid, well capitalised and can compete” he stated.
He was quick to clarify and allay fears of collapsing these banks as it was witnessed in the commercial banks, savings and loans and investment banks. He emphasized that an entirely new approach will be taken to restructure these banks, possibly explore merging some “under-performing” banks.
“The reform plan will be a specialized plan…different from what happened with the banking sector and savings and loans.
“Because of the fact that Rural Banks are community-owned banks, we will have to implement the plans that will suit the community, and we cannot apply the same method as it was applied to the other banks” he corrected.
Story: Eric Gyetuah/Skyy News