Rural and community banks are crucial to banking sector – Deputy Governor

Mrs. Elsie Addo Awadzi, Second Deputy Governor of the Bank of Ghana, has underscored the crucial role that rural and community banks (RCBs) play in ensuring access to financial services, especially in underserved areas.

She said RCDs occupy a prime segment of the financial sector that needed support to excel.

Mrs. Awadzi was speaking in an address read on her behalf by Mr. Yaw Sapong, Director, Other Financial Institutions Supervision Department, BOG, at the ARB Apex Bank 23rd Annual Chief Executive Officers (CEOs) Conference for Rural and Community Banks (RCBs), on Thursday in Ho.

The two-day event, held under the theme “Positioning Rural Banking at the Centre of the National Financial Inclusion Agenda,” brought together approximately 147 CEOs from RCBs across the country.

It is a platform to reflect on the past year’s challenges, achievements and discuss a positive path forward for the sector.

Mrs. Awadzi noted that financial inclusion remains a key national priority, as millions of Ghanaians still lack access to essential financial services.

She reaffirmed the Bank of Ghana’s commitment, in collaborating with ARB Apex Bank, to transform RCBs into catalysts for inclusive growth.

She identified technology adoption, enhanced financial literacy, strong corporate governance, and risk management practices as key drivers of this transformation. He also encouraged partnerships with FinTechs to deliver affordable and efficient digital services to rural communities.

Mrs. Awadzi urged RCBs to embrace digital transformation, innovate to meet the specific needs of rural populations, and work closely with stakeholders to advance Ghana’s financial inclusion agenda.

The National President of the Association of Rural Banks, Mr. Eric Danning, in his address, called on the government to prioritize Rural and Community Banks in national development plans.

He expressed concern that GCB Capital had initiated the disbursement of about GHS1.70 billion to individuals affected by the financial sector cleanup, but without reference to RCBs in the repayment agreements.

He highlighted that the association had previously submitted multiple appeals for the release of locked-up funds, which currently total around GHC500 million.

“The disbursement of these funds could have a significant impact on the operations of the 147 RCBs by strengthening their balance sheets,” Mr. Danning stated.

He further appealed to the Ministry of Finance to include RCBs in repayment agreements and requested a clear timeline for the disbursement of funds to provide much-needed relief to struggling RCBs.

Mr. Alex Kwesi Awuah, Managing Director of ARB Apex Bank, noted that while the rural banking sector is showing signs of recovery from the effects of the COVID-19 pandemic, challenges remain.

He pointed out that the Domestic Debt Exchange Programme (DDEP) had significantly impacted RCBs and ARB Apex Bank, with approximately GHS1.20 billion exchanged as part of the government’s debt restructuring programme.

In addition, GH¢350 million remains locked up with Securities and Exchange Commission (SEC)-regulated companies.

“These challenges have hindered the full potential of the rural banking sector in expanding financial intermediation, deepening financial inclusion, and supporting the country’s economic growth agenda,” Mr. Awuah said.

Despite these setbacks, Mr. Awuah expressed optimism about the digital transformation of the rural banking sector.

He highlighted the successful implementation of the Financial Sector Development Project (FSDP), supported by the Government of Ghana and the World Bank, which has enabled the digital banking platforms of RCBs to become operational.

“We are grateful to the Government of Ghana, the Ministry of Finance, and the World Bank for their immense support. This development demonstrates the government’s commitment to the strategic role of rural banking in promoting financial inclusion in the country,” Mr. Awuah said.

Professor Richard Bani, President of the Volta and Oti Chapter of the Association of Rural Banks, in his welcome address urged participants to apply the lessons learned during the conference to enhance the performance and growth of the banking sector.

He also emphasized the need to increase the number of female CEOs in the sector, promoting diversity in leadership.

Source: GNA

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