Rural and Community Banks cry over Ghc450 million locked up funds | Details

The Association of Rural Banks (ARB) says the delay in payment of Ghc450 million locked up funds of some rural and Community Banks (RCBs) with banks affected by the banking sector clean-up exercise, is adversely affecting them.

The Acting National President of the Association of Rural Banks (ARB), Mr. Kwame Owusu Sekyere stated that all efforts made by the RCBs to retrieve their locked-up funds with some defunct existing financial institutions especially those regulated by the Security and Exchange Commission (SEC), NTC and SIC financial services have failed, deepening the debilitating impact on profitability and capital liquidity ratio of member banks.

He said stringent provisionary requirements have led to technical erosion of capital of some of the rural and community banks hence the desperate need for the locked-up fund to survive.

He disclosed this at the opening of the 22nd Biennial General Meeting and 4th Rural Banking Excellence Awards ongoing in Koforidua under the theme ” The role of Rural Banks: Growing Resilient RCBs in the Contemporary Ghanaian Economy”.

“We submit once again to the government to help in the resolution of this matter. And it’s very imperative because the fact is that we’ve been talking to NTHC and it appears that NTHC does not have the money, the liquidity up to give us, and also they don’t have the collateral to support any arrangement that we want to have. And so we’re in a dead end. The other thing is that we approached the Security and Exchange Commission(SEC) and SEC is telling us that substantial part of the money that is locked up at Black Shield because liquidation order has not been granted to the SEC they cannot do anything. Meanwhile, monies locked up is about Ghc450 million. It’s our fervent belief that payment of the locked-up fund will unleash the full potential of the Rural Banking sector to support the nation’s development,” he said.

Representative of the Governor of Bank of Ghana, Mr. Yaw Sarpong, Head of, other financial Institutions Supervision Department (OFUSD) at BoG said the Bank has introduced risked-based supervision approach where supervisory resources are allocated to areas with the greatest risk.

“Such identifiable risk areas are subsequently addressed in the systematic manner based on priority. This approach increases the effectiveness of supervision through improving supervisory outcomes while also increasing efficiency through improved resource allocation and processes. The Bank through this approach is able to allocate resources to distress rural banks without compromising the safety and soundness of the entire banking sector,” Mr. Yaw Sarpong disclosed.

The Eastern Regional Minister Hon. Seth Kwame Acheampong has appealed to Rural and Community Banks to provide financial support to farmers in their catchment areas to help boost agriculture and enhance job creation in rural areas.

On his part, the Omanahene of New Juaben traditional area Daasebre Kwaku Boateng III who was guest of honour drew the attention of rural and community banks to the importance of Corporate Social responsibilities to attracting indigenous customers.