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08.10.2008 Business & Finance

Rural Banks With Low Capital Can't Pay Dividends

All rural and community banks operating with a capital below GH¢150,000 would not be allowed to pay dividends to shareholders and also open new branches or agencies until they attained that capitalisation.

These form part of changes in the regulation of rural and community banks, introduced by the Bank of Ghana (BoG) in July, this year.

Mr Emmanuel Yaw Sarpong, Head of Banking Operations Department of ARB Apex Bank, who announced this at the 18th annual general meeting (AGM) of Adansi Rural Bank at Fomena in the Adansi North District, said: “The new minimum capital requirement for rural banks is now set at GH¢150,000 and existing banks are, therefore, required to grow their stated capital to that level”.

He also announced that under the BoG new regulation, co-operative ownership of rural and community banks had been restricted to 50 per cent of the total share with that of individual and family ownership fixed at 30 and 40 per cent respectively.

Mr Sarpong said no financial institution was permitted to hold shares in rural banks, but added that shares of rural banks should always be made available for the public to purchase them.

The ARB Apex Bank Head of Banking Operations, said it was time rural banks did organisational restructuring, effective credit administration, cost control and reduction, so as to meet the challenges of the changing competitive business environment.

Commending the Adansi Rural Bank for a good job done, Mr Sarpong appealed to the directors, management and staff to work harder as a team to achieve their set targets.

Mr Francis Dorpenyo, Adansi South District Chief Executive, said the government's economic policies had facilitated improvements in most rural banks in the country.

He commended the Adansi Rural Bank for making people develop confidence in rural and community banking.

Mr Dorpenyo appealed to the stakeholders not to clamour for the payment of higher dividends since the bank was engaged in development projects, including the building of a head office at Fomena.

The Executive Director of Association of Rural Banks, Ghana, Mr K.K. Asiama, appealed to the shareholders to open accounts with the bank and also purchase more shares to help the bank improve its capital and deposit base