Ho, April 22, GNA - Mr Eric Osei-Bonsu, President of the Association of Rural Banks has suggested that, the ARB Apex Bank should set up an umbrella unit to manage loans and credits to ease the strain the non-payment of credits was putting on rural banks. He said the unit should be along the lines of the Non-Performing Assets Recovery Trust (NPART), set up by government under the aegis of the World Bank in 1990, whose efforts turned around the fortunes of some distressed commercial banks.
Mr Osei-Bonsu was delivering the keynote address at the 4th National Manager's Conference in Ho on Thursday, under the theme, "Enhancing Strategies for Deposit Mobilisation". The three-day meeting is to take stock of the past year's performance and to map out strategies for the future. Mr Osei-Bonsu said to allow loans granted by rural banks, whose deposits were mobilised "largely from the poor and the deprived to go bad was untenable and defeats the objective of the rural banking system".
He said the ARB Apex Bank thrived on the deposits of the rural banks and must, therefore, show interest in ensuring that loans given by the rural banks were recovered.
Mr Osei-Bonsu said besides the ARB Apex Bank, a novelty in Africa, representing a test case for rural cash mobilisation for rural development experts, adding that, the massive donor support for the banks must not be allowed to whittle away.
"As a result of a lot of donor support extended to the rural banks for capacity building in the past, there are now 97 satisfactorily performing banks as compared to only 23 satisfactorily performing banks in 1991," he said.
Mr Osei-Bonsu said figures released by the Efficiency Unit of the ARB Apex Bank Limited put total loans and advances of the rural banking system as at September 2004 at 55.7 billion cedis. He said if 10 per cent of such loans were labelled as bad loans then "we are talking of 5.57 billion cedis", which is an awful lot. Mr Osei-Bonsu said immediately, the Apex Bank should strengthen its Legal Department to pursue loan defaulters of rural banks with a percentage of payment of recovered loans being grated the Apex Bank cover expenses.
He said additionally, Apex Bank should engage experienced credit officers to assist the rural banks in appraising loans in order to reduce the incidence of bad and unrecoverable loans. Mr Osei-Bonsu also called for the intensification of training of credit and project officers of rural banks to attain the required expertise and competence in credit administration.
Mr Emmanuel K. Kwapong, Managing Director of ARB Apex Bank said the biggest Challenge facing rural banking today was how to develop "innovative agrilending products to meet the needs of our customers". He said though 75 per cent of Ghana's 60 per cent population, who dwell in the rural areas depend on Agriculture for a living, "yet less than 10 per cent of our loan portfolio goes into agriculture, because banks do not want to lend to this risky sector".
Mr Kwapong regretted that out of the 120 rural banks in the country, only two had women as managers, saying that, everything possible would be done to enhance the capacity of female staff to aspire to take up leadership roles in our banks.
He announced that the celebration of a "Rural Banking Week" would commence this year, possibly in the same week as the "World Thrift Day". Mr Kwapong said the Apex Bank would open its regional offices in Takoradi, Bolgatanga, Sunyani and Kumasi this year, to deepen its services of improving the performance of rural and community banks. He announced that Sekyere and Atwima-Kwawoma rural banks have been computerised under the Rural and Community Banks Computerisation programme.
Togbe Bini Lawluvi VI, Volta Regional Representative on the ARB Apex Bank Limited said external auditors of the rural banks should go beyond the yearly routine examination of accounts of the banks to advise on the strategic direction of the banks.
He said for example, external auditors should be made to periodically attend Board meetings, closely study corporate plans of the banks and evaluate loan portfolios.
Togbe Lawluvi called for the support for the products of the ARB Apex Bank, noting that its inception had elevated rural banking to a high level with many customers of orthodox banks leaving them to avail themselves of our well-targeted products.
Topics to be treated during the three-day meeting include Enhancing the Capacity of Professional Women in Rural Banking, Saving, Mobilisation and Rural Banking and New Product Development.