37 rural banks yet to meet GH¢1m capital requirement

Out of the 141 rural and community banks (RCBs) in the country, 37 are yet to meet the GH¢1 million minimum capital requirement as at the end of the second quarter of this year, ARB Apex Bank, has announced.

The RCBs were required to meet the Bank of Ghana’s minimum capital requirement by the end of December, 2017.

Mr Kojo Mattah, Managing Director (MD) of ARB Apex Bank, has, therefore, urged RCBs trailing in the minimum capital requirement to expedite action on their compliance plans.

He said: “it is necessary for all RCBs to comply, and even add more to the regulatory minimum capital, to enable them to take advantage of bigger business opportunities.”

Mr Mattah said these in a speech read on his behalf by the Sunyani Manager of the

Bank, Mark OdoiAdjei, at the 15th annual general meeting of Nafana Rural Bank at

Sampa in the Brong-Ahafo region.

He said “ultimately, liquidity should be the priority. Insufficient liquidity would lead to inability to meet depositors demand, and would quickly descend into loss of customers’ confidence and eventual run on the bank within a very short time”.

Mr Mattah said closely linked to liquidity and profitability was credit risk, indicating that ‘poor credit assessment, inadequate information about customers, poor loan documentation and inadequate or lack of monitoring generates non-performing loans. High NPL erodes liquidity and profitability.’

Mr Mattah also advised RCBs to be cautious about the use of Information and Communication Technology (ICT), saying “ICT investments require huge capital outlay and if not done cautiously, it can lead to massive losses in the medium term to long term, while hackers may also capitalise on losses ends to siphon funds from the system.”

The Vice Chairman of Board of Directors, Nafana Rural Bank, Pascal Essieh, who deputised for Haruna Maamah, the Chairman, said the bank posted impressive growth in all the performance indicators during the 2017 year under review.

The bank, he noted, recorded a profit before tax increase of 152 per cent from GH¢104,011 in 2016 to GH¢261,747 in 2017.

Mr Essieh said net worth went up significantly by 216 per cent from GH¢338,821 to GH¢1,069,772, and total deposits of the bank surged from GH¢4,703,897 in 2016 to GH¢5,649,284 in 2017, showing 20 per cent growth.

Total assets of the bank increased from GH¢4,703,897 to GH¢7,769,672, representing 33 per cent increase while investments soared by 118 per cent from GH¢703,192 to GH¢1,531,334, he stated.

Mr Essieh said the stated capital of the bank increased from GH¢377,160 in 2016 to GH¢912,660 during the year under review, but the bank managed to meet the GH¢1 million target as at March 31, 2018.


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