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Bank of Ghana to investigate allegations against rural banks

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The Bank of Ghana (BoG) has said it would investigate allegations made against officials of the Adansi Rural Bank brought and would address problems the bank is facing.

Some of the allegations are granting of huge credit facilities to individuals and businesses, giving loans to directors without BoG’s ratification in violation of the Banking Act and opening of branches without trained staff and inadequate internal control systems.

Mr Boyd Donkor, Assistant Director, Banking Supervision Department of BoG, said this at the 21st annual general meeting of the Adansi Rural Bank at Fomena.

He said another worrying trend in rural banking is the fact that some of them tend to behave like large commercial banks.

Mr Donkor said some of the rural banks had breached their traditional catchment areas, moved to urban centres and had gone into certain types of business and granting of facilities for which they might not have the expertise to sustain it.

“It is for this reason that we need discipline, law-abiding and committed board and management to ensure that the hard earned depositors and shareholders’ funds are adequately protected.” he said.

Alhaji Lateef Majdoub, the Adansi North District Chief Executive, appealed to the management and the board to step up their lending support to the people who are largely farmers and small scale business on flexible terms.

Ahmad Kwame Boakye, Board Chairman of the Bank, said the bank’s profit before tax in 2010 was GH¢201,316.27 which showed a 34 per cent drop over the 2009 profit of GH¢306,580.72 due to the expansion of the bank.

The banks total assets rose from GH¢8.1 million in 2009 to GH¢12.3 million in ¢2010, an increase of 52 per cent adding that an increase of 65.33 per cent was also recorded in the bank’s deposits from GH¢5.5 million in 2009 to GH¢9.77 million in the year under review.

He said the bank’s paid up capital was GH¢205,215 which was above the BOG minimum regulatory capital of GH¢150,000.00.

Source: GNA

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