Table Banking: The Emerging Banking System In Rural Ghana

Table banking may not be a complex financial concept but it is making a difference in the lives of thousands of women and families in rural Ghana. It is simple idea whereby members gather in every month and literally put their money on the table then becomes immediately available to members on loans. This practice eliminates banking fees, waiting period for loan approval. Many obstacles faced by women in Ghana who need loans as a result of lack of collateral. The table banking has transformed many lives for better in the rural areas without going through the traditional commercial banking system.

In recent times, the banking sector in Ghana has experienced financial crisis which were mainly on liquidity problems and other financial regulatory non- compliance established by the regulator (Bank of Ghana). This article focuses on the rural banking system in Ghana.

The recent revocation of licenses of insolvent microfinance companies in Ghana by the regulator (Bank of Ghana) has put fears in many rural people in Ghana hence an increased in the practice of table banking system because of fear of losing their investments and deposits with the problems that had plagued the banking sector.

Table Banking is a group based funding system where members of a group make weekly or monthly monetary contributions to form a kitty from which members can borrow. The group holds regular meetings where issues are addressed, fines paid, loans administered and defaulters confronted. In cases where the group gets funding from outside e.g. the Women Enterprise Fund and microfinance institutions. Group guarantee comes into play where members act as guarantors to each other’s loan and when one defaults, the rest can’t access finance, which in turn motivates members to keep each other accountable. Table banking is common amongst women but there are exceptions with mixed gender and men’s groups also in existence.

Advantages of Table Banking

• The ‘table bank’ is group owned, thus gives members a sense of pride, also, interest earned from loans still goes back to the groups’ kitty.
• Table banking can be used by the poor, with contributions as low as GHC10 and no need for collateral, it promotes financial inclusion.
• The close interaction between members fosters an exchange of knowledge and skills in regards to making investments.
• It is a convenient banking option as they are located within communities-easy access and tailored to members needs.

Potential of Table Banking
Table banking is not just for rural women groups with small investments here and there. The working class is in for the ride too.

The Basic rules of the table banking system

1. Ensure that you only introduce the system to trustworthy members and this means that you have to conduct due diligence about a person before letting them join the chama. Members should be people well-known to you from church, colleagues at work, neighbors in the estate or in the village or family members. You do not want to have a situation where a
2. Members of the group, nature (Business) aim of the group, the officials of the group member takes off with money belonging to other members.
3. It is also important to have a chama constitution that will govern both the chama and the table banking system. The constitution should give precise information about the group: When the group was formed, the and the rules and regulations of the group.
4. When giving out large loans members may be required to give something as security and here, it is important to set boundaries to ensure that people.
5. , you should have a plan which may also involve keeping the security they had provided to sell and recover the loan. Involving the authorities might be your best options do not lose more than they contributed which may defeat the purpose of coming up the group.
6. Some people may default on their loans for one reason or another and this can be very tricky for the chama and the table banking system. In such cases in instances where the person had not provided any security for the loan they requested.
7. Discipline is very important for the table banking concept to work for your chama. With discipline, everybody will play their role and things will run smoothly even if they will not be perfect.

Conclusion
The table banking system in the rural areas of Ghana is a concept which is not complex as the traditional commercial banking system and it has better the lives of many people especially women and families in rural Ghana.