With just two months for the deadline period of the new capital requirement for rural banks to expire, Citi Business News has gathered that most rural banks are struggling to recapitalize.
The Bank of Ghana(BoG) announced a new capital requirement of one million cedis for rural banks to meet by 31st December.
According to the Bank of Ghana, 140 rural banks have been licensed as at April 2016.
Out of this, the Ashanti region has the highest number with 25, followed by the Eastern region with 23 rural banks, then the Brong Ahafo region with 22 rural banks.
Central region has 20 rural banks while the Western region has 14, followed by the Volta region with 13, Northern and Greater Accra regions with 7 each, Upper East 5, and Upper West region 4. Information gathered by Citi Business News indicates that most of these rural banks are racing against time to meet the deadline for new capital requirement of million cedis by 31st December.
Speaking to Citi Business News, the Managing Director of ARB Apex Bank Kojo Mata disclosed that some rural banks are requesting for an extension of the deadline.
“Some of the rural banks are struggling to meet the December 31st deadline and are pleading with the Bank of Ghana to do something about it. We hope something will be done about it,” he said.
It appears moves by the Bank of Ghana to raise the capital requirement for most subsectors in the financial sector may push some financial institutions to consider mergers or drop to lower categories to meet smaller capital requirement.
The Chairman of the Ghana Micro Finance Institutions Network, Collins Amponsah Mensah also tells Citi Business News micro finance companies are facing similar challenges as they struggle to meet the 2 million cedis new capital requirement by December 31st, 2017.
“About 80 percent of our member institutions will not be able to meet that deadline and we already engaging Bank of Ghana on that,” he said.
“We are engaging the Bank of Ghana (BoG) to look at either pushing the deadline forward, and see how government can look at microfinance as a complete project and see how they can support these intuitions to attract the needed capital from other sources,” he added.
Mr. Mensah stated that the increase is relevant to strengthen the industry but added that more time will be needed to meet the new requirement.
He explained that microfinance companies are required to generate their fund locally devoid of direct cash injection from financial institutions outside the country.
“We are in support of the two million but the point is how the institutions will raise it as a country, do we have the capacity to attract 2 million cedis to over 600 plus institutions, ? that is the question we need to ask ourselves”.
The Bank of Ghana recently increased the capital requirement of banks from 120 million cedis to 400 million cedis to strengthen the financial operations of banks. Even though the banks have up until to 2018 to meet the new requirement banking consultant, Nana Otuo Acheampong is optimistic the moves taken by the Bank of Ghana will strengthen the entire financial sector and reposition financial institutions into their required categories as the economy expands.
–
By: Lawrence Segbefia/citibusinessnews.com/Ghana
