Financial Institutions urged to lower their interest rates

09-05-2011

Narration: Financial institutions across the country have been encouraged to as a matter of expediency lower their interest rates for lending to promote business activities so as to create jobs for the unemployed. The Upper East Regional Minister, Mark Woyongo who made the appeal at the 18th Annual General Meeting of the Bawku East Small Scale Farmers Association (BESSFA) rural bank, said considering the significant reduction in the rate of inflation countrywide, conscious efforts must also be made to attract more peasant farmers gain access to loan facilities to expand their activities. The occasion which brought together chiefs and relevant stakeholders in the banking industry of the region, was marked with the official inauguration of the Bawku branch of BESSFA rural bank Limited at Bawku in the Upper East Region. Correspondent Isaac Asare was there for Radio Ghana.

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Provided with a licensed to operate the business of Banking by the Bank of Ghana (BOG) under Act 339 of 1970, BESSFA Rural Bank came into being with an initial capital 37.50 Ghana Cedis made up of 12.50 Ghana Cedis BOG preference shares and 25 .00 Ghana Cedis ordinary shares. This law was aimed at creating banks to serve populations which would otherwise be cut from financial services. In accordance with the banking law, BESSFA was afforded the opportunity to operate within a radius of 20 miles and can now boast of 1,708 relevant shareholders and 527,015 total shareholder’s funds including stated capital of 150,286 Ghana Cedis as stipulated in the 2008 financial reports. Saddled with numerous financial and managerial difficulties, most rural banks including BESSFA lost their credibility, thereby compelling the BOG to close as many as 23 distressed Rural Banks. This was due to lack of public confidence in Rural Banks. In addressing the weaknesses, the ARB Apex Bank owned by the rural banks was therefore instituted with the aim to strengthen the capacities of the rural banks individually and as a sub-sector in the financial services industry. ARB began its banking business in July, 2002 after being granted a banking license in 2001. At the official commissioning of the Bawku Agency of BESSFA Rural Bank Limited, the Chairman Board of Directors of BESSFA, Mr. Solomon Atiiga said the bank since its establishment had lived up to its social corporate responsibilities by supporting various community projects and initiatives among other social functions, notably the best farmers award scheme. He said despite the level of achievements, the performance of the bank has dwindled and had been greatly affected by the Bawku conflict that created general insecurity as most business activities were almost grounded to a halt. The intense situation that led to the ban on motor bike riding in 2010 also had a rippling effect on the monitoring aspect of the bank in their effort to retrieving loans from their defaulters. Growth in deposit on the other hand recorded some gains with the Bawku Agency achieving little above expectation. The Banks total level of deposit in 2010 was highly appreciable as it recorded a 16.7 percent increase of 4,783,592 as against 2009 figure of 3,801,879. Mr. Atiiga disclosed that any gains within the communities they operate particularly Garu will be surely retained and appealed to all to open account at the bank to enable them share the benefits. Mr. Atiiga bemoaned the huge financial debt owed by loan defaulters and appealed to all beneficiaries of loans and overdraft to do their possible best by paying all their outstanding loans and overdrafts to ensure the sustainability of the bank. Mr. Attiga also threatened legal action against defaulters who fail to honour their loan obligations. The Upper East Regional Minister, Mark Woyongo who facilitated the commissioning of the new project, appealed to financial institutions to as a matter of expediency lower their interest rates for lending to promote business activities so as to create jobs for the unemployed youth considering the significant reduction in the base rate of inflation in the country. He also encouraged small holder farmers and business entities to take advantage of the bank to expand their businesses. Mr. Woyongo accompanied by the General Manager of BESSFA, Solomon Awini, and other board of directors later cut sod to officially inaugurate the new edifice estimated at the cost of 413,709 Ghana Cedis .

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