Rural banks should revise operational models – BoG

The head of supervision of the Bank of Ghana (BoG), Mr Franklin Belnye, has advised rural and community banks to revise their operations to enable them to withstand emerging challenges in the financial services sector.

He said with the growing competition and expansion of services by commercial banks’ and non-bank financial institutions into areas which were hitherto preserved for rural banks, it was important for them to brace up to face the challenges.

“Customer service, quality service in a timely and cost efficient manner will be critical in determining whether you gain or lose customers,” Mr Belnye stated.

He was  addressing the opening of the 17th biennial general meeting of the Association of Rural Banks at the Ho. The three-day event was on the theme, “Unleashing the Potentials of Rural Banks-The Role of Key Stakeholders”.

The head of banking surpervision said the BoG would continue to provide support to Rural and Community Banks (RCBs) through on-site and offsite monitoring mechanisms and would also continue to review policy and tailor them to enable them to face the emerging challenges.

Mr Belnye disclosed that the BoG was considering opening the shareholding of rural banks to foreigners aimed at expanding the scope of capitalisation in order to make them resilient in the highly competitive financial market.

“Given the exigencies of banking operations now, a higher capital level is warranted and banks are advised to initiate steps on their own to address any capital challenges they face before they are pushed,” he cautioned.

He assured them that the BoG would continue to initiate monetary policies to ensure a stable macroeconomic environment to facilitate growth of businesses, including rural banks.

Mr Belnye, however, called on the government to puruse its decentralisation policies, particularly financial decentralisation, and ensure that funds meant for district assemblies were channelled through RCBs in their catchment areas.

He commended the association for establishing the ARB Apex Bank because it had bolstered rural banking by eradicating the problems of clearing and settlement challenges that confronted RCBs in the 1980s and the identity crisis that culminated in the collapse of a number of banks in the mid-90s.

In an address read on his behalf, the Volta Regional Minister, Mr Henry Ford Kamel, said the introduction of rural banking had led to the breaking of the myth in the financial relationship with the rural people, adding that the banks had also made significant impact on their catchment areas under their social responsibility programmes.

The President of the Association of Rural Banks, Mrs Rose E. Newman, reiterated the call to the central bank to continue to father rural banks to empower them to enable to deliver on their mandate in the rural areas.

She congratulated the 27 RCBs for being listed in the prestigious Club 100 group of companies and reaffirmed the resolve of the association to ensuring that rural banks operated effectively and serve as vehicles for rapid rural development.

Source: Daily Graphic

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