Rural Banks dissatisfied with Bank of Ghana’s minimum share capital requirement

31-03-14     

The President of the Upper East Chapter of the Association of Rural Banks, ARBs, Alhaji Sheriff Adams is appealing to the Bank of Ghana to relax its minimum share capital requirement for rural banks in the country, particularly those in the northern sector. He disclosed that directors and management of Rural and Community Banks, RCBs of Northern Ghana are dissatisfied with the newly revised minimum share capital, which has been increased from 150 thousand Ghana Cedis to 300, thousand Ghana cedis to be met by the end of the year. Alhaji Adams told Radio Ghana that the upward adjustment of the share capital could lead to the closure of many rural banks because it would be difficult for them to meet such requirements. The inability of the banks to operate, he warned could also have a rippling effect on government policies and programmes aimed at reducing poverty in deprived areas of the country. Invariably, banks that are not able to comply in meeting the set deadline, will not be permitted to  pay dividends and as well open new branches. He said rural and community banks remain the life wire in the provision of funds for most microfinance businesses, therefore if pragmatic measures are not instituted to ensure the smooth running of the banks, most rural enterprises would not be empowered to expand their businesses. The Bank of Ghana recently revised the minimum paid up capital of RCBs with a flexible time-frame for RCBs to comply. In view of the revision, most RCBs are struggling to meet the previous deadline though they have made strenuous efforts to close the gap. Alhaji Adams explained that looking at the poverty level in deprived areas of the country, getting people to understand and buy shares to enhance the operations of the banks was a major challenge. This is because majority of the people who are predominantly farmers do not see the need to invest into banks. He however appealed to the Central Bank to reduce the minimum share capital and extend the time frame to enable the banks raise the needed share capital to function. He observed that though each bank has its own challenges, it was still imperative for the rural banks to collaborate and merge to be able to raise the said amount since the ARB APEX Bank has a package for banks to go into merging in order to meet the expected share capital requirement.

GBC                                                                         END                                                              IA/