SMEs Must Manage Loans Prudently

Alhaji Yusif Ibrahim - Board Chairman, GT Bank

Small and medium-scale entrepreneurs need to use loans obtained from banks prudently to win the confidence of the banks and the entire financial system.

The Managing Director of Guarantee Trust (GT) Bank, Mr Dolapo Ogundimu, told the Daily Graphic, that the effective management of the loans by owners of small and medium-scale enterprises (SMEs) would also enable them to win the trust and confidence of banks and reduce the size of their non-performing loans (NPL).

“The greater proportion of our non-performing loans is from the SME sector and we are very much concerned about the phenomenon because of its impact on the bank’s profitability,” he added.

Mr Ogundimu said it was part of GT Bank’s resolve to help the economy to grow and the SMEs, which formed an integral part of national development scheme, should redeem their part of the bargain.

It has been argued that the high NPLs is one of the major reasons why the banks are unable to reduce their interest rates in spite of the improved performance of the macroeconomic indicators.

As a result, he said, the bank, winner of the 2009 Bank of the Year award, has put in place some stringent measures to reduce the incidence of NPLs.

“We have put in place a stronger risk management team that scrutinises the information sent to us by the owners of SMES who want to borrow to grow their businesses, among others”, Mr Ogundimu said.

He said the bank was passionate about the growth of the SMEs, and noted that in spite of the challenges, it would continue to lend support.

“All we ask of them is to take credit seriously so that we can be able to safeguard the money saved with us by others and also get more to lend to others who require our services,” he said.

Mr Ogundimu said the bank offered free advisory services to SMEs to guide them on different aspects of loan management and the running of their businesses and noted that it was, therefore, no surprise that the bank was rewarded by its customers as the Best in Advisory Services.

On the bank’s roll-out plan, he said the bank presently had 20 branches in seven regions of the country and was on the verge of inaugurating the Tamale branch to serve the people in that part of the country.

He said GT bank had come to stay and was poised to ensure that it opened branches in areas where there was business.

But Ogundimu said “we go where there is business and so far all the branches we have are cited at places where there is business”.

According to him, the bank was not spreading for the sake of it but was doing so strategically to ensure that it operated profitably.

About the awards at the 2009 Ghana Banking Awards organised by Corporate Initiative Ghana (CIG), he said the laurels came as a result of the persistence of the bank to deliver high standard and quality services that met the aspirations of its customers.