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17.11.2009 Business & Finance

Government, BOG asked to protect rural banks from poaching

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Kumbungu (N/R), Nov. 16, GNA - The North Eastern Chapter of Association of Rural Banks has called on the government and the Bank of Ghana (BOG) to protect rural banks from poaching of their staff by the traditional banks.

The Chapter, which comprises rural banks in the Northern and Upper East regions, said the rural banks played a crucial role in the rural economy and therefore every effort should be made to mitigate their plight arising from the fierce competition from the commercial banks as markets in the urban areas had become saturated.

Mr. John Asabigi, President of the North Eastern Chapter of Association of Rural Banks, said this in an address at the 8th biennial General Meeting of the Chapter at Kumbungu in the Tolon/Kumbungu District at the weekend.

Mr. Asabigi said technological advancement in the banking industry had also heightened the competition.

"It is therefore imperative that management and staff of the rural banks position themselves to effectively confront these challenges".

He said the BOG directive that all rural banks, which had not attained the upgraded minimum share capital of GH¢150,000 should not pay dividends to shareholders or open new branches and agencies, though well intentioned, was adversely affecting the ability of the rural banks to improve share capital mobilization.

Besides, he said, it was difficult for the banks to embark on expansion programmes since most of them were still struggling to attain the mandatory stated capitalization.

Mr Asabigi said in spite of all the challenges, the rural banks made impressive strides in deposit and share capital mobilisation, as well as the granting of loans, quoting an ARP Apex Bank Evaluation and Monitoring Unit report of June 2009.

He said deposits rose to GH¢ 18,538,654.46 in June 2009 from GH¢ 13,235,818.50 in June 2008, loans and advances went up from GH¢8,522,965.92 in June 2008 to GH¢11,693,434.64 in June 2009 while paid-up capital improved from GH¢865,691.74 in June 2008 to GH¢4,246,707.96.

Mr Asabigi told the meeting that out of the 129 rural banks in the country, the North Eastern Chapter had only 11, six in the Northern Region and five in the Eastern Region.

In a speech read on his behalf, Mr. Prince Askia Mohammed, Savelugu/Nanton District Chief Executive said with the expected massive injection of resources into the three northern regions under the Savannah Accelerated Development Authority (SADA), "a new era for the growth and development of rural banking has dawned on our part of the world".

Kumbun-Naa Yiri II, paramount chief of Kumbungu, commended the rural banks for their significant contributions to the development of their catchments areas but urged them to make it easier for the ordinary people in the communities to access some small loans to enable them to engage in income-generating activities.


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