President of the Association of Rural Banks (ARBs), Daniel Ohene Kwaku Owusu, has said his outfit will re-engage the Central Bank on its directive to banks and other Specialized Deposit-Taking Institutions (SDIs) to suspend the payment of dividends to their shareholders.
He indicated that though the Bank of Ghana’s directive was with good intentions, the directive did not go down with the majority of shareholders of financial institutions.
In March this year, the Bank of Ghana (BoG) directed banks and SDIs to desist from declaring and paying dividends and from making other distributions to shareholders for the 2019 financial year.
This was part of measures to forestall profitable operation following the impact of the COVID-19 pandemic.
Speaking during the 21st Biennial General Meeting in Kumasi, the President of the Association, Daniel Ohene Kwaku Owusu appealed to the BoG to reconsider the decision.
“The suspension of the declaration of dividend for 2019 and 2020 by the Bank of Ghana, even though with the best of intention, is causing disaffection among shareholders. We, therefore, appeal to the Bank of Ghana to re-consider the matter of payment of dividend for the 2020 financial year,” he said.
Kwaku Owusu further said the emergence of COVID-19 in the early part of 2020 has disrupted the normal programs of the entire banking industry which included unplanned expenditure to combat the pandemic, rescheduling of loan repayments and reduction of lending rates, rescheduling of assignments and work programs, among others have adversely affected profitable operations of the Rural Community Banks (RCBs).
The Bank of Ghana has also drafted a Corporate Governance directive and risk management guidelines for Rural and Community Banks to address the lingering Corporate Governance and Risk Management weaknesses in the Rural Banking Sector.
The directive seeks to establish sound Corporate Governance principles and best practices within the sector.
President of the Association said Rural Community Banks are poised to embrace the reforms some of which are enshrined in the draft Directives on Corporate Governance, Risk Management, and Fit-and-Proper-Persons among others, but insisted that these must be implemented in a systematic and logical manner, in order to avert unfortunate challenges.
Speaking at the same event, Managing Director of ARB Apex Bank, Kojo Mattah, encouraged RCBs to make conscious and bold efforts to invest heavily in marketing their banks.
According to him, marketing campaigns can help boost customer and investor confidence in their banks.
“I want to use this platform to plead with RCBs that marketing is an investment and should not be viewed as a cost which should be cut back during austere times,” he stressed
President of the Association also added that the ARB would continue to strengthen its advocacy role to raise the image of RCBs and secure more sponsorship for capacity-building programs.
The 21st Biennial General Meeting of the Association of Rural Banks was on the theme ‘Financial Sector Reforms and its impact on Rural Banking; Challenges and benefits’.