The Governor of the Bank of Ghana (BoG), Dr. Ernest Addison has stated that the central bank will be flexible in implementing the new capital requirement for rural banks.
The Bank of Ghana set the end of this year for all rural banks in the country to meet a new capital requirement of one million cedis.
With just a month for rural banks in the country to meet the one million cedis capital requirement, Citi Business News understand most of them may not be able to meet it.
Speaking at a press conference after the Monetary Policy Committee (MPC) meeting, Dr. Addison stated that the central bank will work with rural banks by being flexible in the implementation of the new capital requirement.
“This is an important one, we set the minimum capital for rural banks at a million cedis, but quite a number of them are yet to meet it and today is 27th November, with the deadline at the end of this year. I had said during the rural bank week that the Bank of Ghana will be flexible about that. We will work with the rural banks to strengthen the levels of capitalization,” he said.
“It’s important to the extent that we are allowing them to take on depositors fund, we have to ensure that these banks are strong enough to do that, and this is the assurance that I gave them that we would be flexible and work with them to build up the level of capitalization,” he added.
Figures published by the Bank of Ghana show that, 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 the new capital requirement of million cedis by 31st December.
The Managing Director of ARB Apex Bank, Kojo Mata in October narrated how banks are struggling to meet the new capital requirement
“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.
According to him, rural banks are crucial in lending to traders and business owners across the hinterlands where commercial banks may not want to operate since it may be unprofitable.
By: Lawrence Segbefia/citibusinessnews.com/Ghana