The ARB Apex Bank and the Association of Rural Banks (ARB)-Ghana have expressed concern about the impact of the corporate income tax on the operations of Rural and Community Banks (RCBs) and, therefore, appealed to the government to review the thresholds.
The group also appealed to the government to redirect the payment of the District Assemblies Command Fund (DACF) through the RCBs in the country.
They made the appeal at the climax of the 7th rural banking week celebration held in Takoradi on theme: “The Role of Rural Banking in Financial Inclusion.’
The Managing Director of ARB Apex Bank, Mr Kojo Mattah, mentioned that his outfit had submitted several petitions to the government, particularly on the increase in the corporate income tax from the previous eight per cent to 25 per cent.
He said “We are aware that the tax hike came into being four years ago, but we also know that the government is pro-business and fully committed to the expansion in the economic fortunes of the rural folks. ARB Apex Bank, therefore, wishes to use this platform to urge the government to consider a lowering of the corporate income tax for the rural banks.”
The RCBs, Mr Mattah argued , applied substantial portions of their profit towards progressive corporate social responsibility programmes in the communities in which they operated and recalled that the medical education of one of the most prominent doctors in this country was fully borne by a rural bank.
“The banks can do even more if the proposal for a reduction in the corporate income tax paid by the RCBs is considered favourably.”
“Our second request relates to the District Assemblies Common Fund (DACF) administration. Our members have the capacity to process payments to contractors, service providers and other beneficiaries of the DACF. We therefore wish to use this platform to plead with the government to direct Administrators of the Common Fund to channel all funds geared towards rural development to be paid through our rural banks,” he said.
He said “If done, this would be a major shot in the arms of the rural banks, since the minimal fees would boost the profitability of our member banks. Again, paying the DACF through the rural banks would further boost the confidence of shareholders and customers of the banks.”
He said, after the first Rural Bank was established in AgonaNyakrom in 1976, many people wondered about how workable the whole ‘unit’ banking was going to succeed but told the meeting that, after almost five decades, “we are here today celebrating the seventh Rural Banking Week. “
He indicated that although, the RCBs command only a little around 10 per cent of the total banking industry’s deposits, their overall resilience over the years had proven that, rural banking was the most successful and endearing indigenous Ghanaian business model, owned and operated by the local communities.
Mr Mattah said “This strategy is reflected in almost all the 144 RCBs spread throughout the 16 regions of the country. Shareholders, Directors, Management, Staff, and customers of the banks are often selected from members of the communities. This communal ownership has engendered greater accountability and homegrown corporate governance in the banks. Some community members feel very proud and tout the little shares they own in the banks, because the banks are perceived as their heritage.”
“We have gone to the very ends of the country where all the High Street banks fear to tread. The RCBs fill GH¢50 to GH¢100 micro-credit void that cannot be met through the provision of sophisticated documentation, security and collateral requirements of the other banks. The RCBs have come to stay. We see ourselves as veritable partners in the government’s agenda to improve financial intermediation and inclusion in the country. “
The president of ARB Ghana, Daniel Ohene K. Owusu, noted that RCBs promoted financial intermediation to stimulate economic activities in the deprived communities with the ultimate objective of improving living standards.”
He said “RCBs have steadily become a formidable force in the rural financial intermediation, supporting the growth and development of micro, small and medium enterprises as well as individual economic initiatives.”
“Financial inclusion has become a matter of necessity and prompt measures have to be consciously adopted by the RCBs towards the attainment of an all-inclusive vibrant banking sector for an improved standard of living of the vulnerable. The public should have confidence in the RCBs and continue doing business with them without any fear and being skeptical.” he said.
FROM CLEMENT ADZEI BOYE, TAKORADI