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29.11.2005 Business & Finance

Rural banks mop up 1.5 trillion cedis

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Accra, Nov. 29, GNA - The 120 Rural and Community Banks (RCBs) in the country have to date mopped up a total of 1.5 trillion cedis as deposits from the rural population, Mr Richard Addo, Head of Training of the Association of Rural Banks (ARB) Apex Bank, said on Tuesday. He said the banks had also given 677 billion cedis out as loans and credits to individuals and Small and Medium Enterprises (SMEs) in the rural communities.

At the moment, the sum of the assets of RCBs is estimated at two trillion cedis.

Mr Addo made this known to journalists attending a day's seminar organized by the ARB Apex Bank to educate the media on the history, metamorphosis and the achievements of the RCBs over the years. The seminar was also to introduce the new product, Home Cash and Apex Link of the ARB Apex Bank, to journalists. Mr Addo noted that but for the existence of RCBs, most of the rural folks, who formed 70 per cent of the population, would be keeping their money under their beds, in holes on their farms and in some other obscure places because the stringent requirements by the big commercial banks denied the rural folk the opportunity of banking services. "What this means is that the current 1.5 trillion sum of deposits of all RCBs would have been in people's homes and farms." He said beside the credit RCBs gave to SMEs and individuals, they also fulfilled their social responsibilities to their various communities by providing KVIPs, boreholes, hospitals, streetlights and scholarship packages to needy but brilliant students. "This is why I think the media are not doing well in how much they talk about the RCBs because we are almost rubbing shoulders with the big commercial banks and with similar institutions across the world and yet our local media are not giving us the publicity we deserve."

Mr Addo said as part of the RCB computerization programme, the ARB Apex Bank was making efforts to establish RCB ATMs from where customers of any rural bank could cash money anywhere in the country. He said currently the computerization projects was at a pilot level in which four rural banks in the Ashanti Region had been computerized and linked for inter-communication. "We have acquired all the hardware and software for the computerization project and we hope to complete it in the next three years to enable all 120 RCBs to communicate and provide better services," he said.

Mr Addo, however, noted that ahead of the full computerization programme, Apex Bank, through the Apexlink, had enabled the RCBs to provide instant money transfer services, which ran on telephony system, in their 605 offices across the country.

The Apex Bank has also just introduced the Home Cash Service, with the catch phrase "efie ne fie" in twi, meaning "home is home", which has made it possible for both residents and non-resident citizens of particular communities to buy shares in RCBs in their hometowns. He said very soon the Apex Bank would introduce the Credit With Education (CWE) scheme to educate farmers on where, what and when to cultivate before they were given credit to ensure that they invested the money wisely and made enough to repay the loans.

Mr Addo also said another strategy, dubbed Know Your Customer (KYC), had been introduced to ensure that staff of RCBs collected the background information of their clients in order to determine the sources of funds clients deposited in their accounts to check money laundering.

He noted that over the years RCBs had performed creditably, saying that in 1992 when the minimum capital adequacy ratio (MCAR) for RCBs was six per cent, only 23 RCBs performed satisfactorily, but now that the MCAR had been raised to 10 per cent, 101 RCBs have performed satisfactorily.

"Even the remaining 19 banks, which did not meet the 10 per cent MCAR, are not distressed," he said.

Mr Addo pointed out, however, that as at 1999 three years after the first rural bank was established, there were 133 RCBs in the country but in the same year, 23 were closed down for reasons of operational, management and manpower problems.

He said the ARB Apex Bank was making every effort to make the operations of RCBs smooth. The Bank is providing services of a central bank, including cash supply, cheque clearance, inspection, product development, treasury management and computerization for the RCBs. "We currently run 12 bullions for the evacuation of cash to and fro Apex Bank and RCBs and we are procuring eight more before the close of this year," he said.

He said the Ghanaian example of the establishment of RCBs had attracted the attention of countries like Zambia, Botswana, South Africa, Kenya, Uganda and Mozambique that had requested the support of the ARB Apex Bank.

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