BoG: Rural banks must meet minimum capital requirement by end of 2021

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    In 2015, the BoG made an upward revision to the minimum capital requirement of rural and community banks from GHC300,000 to GHC1 million.

    Dr Ernest Addison, the Governor of the Bank of Ghana (BoG) has said the central bank expects rural and community banks in the country to meet the minimum capital requirement of GHC1 million by the end of 2021.

    He said, “It is our expectation that all rural and community banks will fully comply with the minimum capitalisation requirement of GHC1 million by the end of 2021 and maintain the increased capital unimpaired.”

    Dr Addison was speaking at the 40th anniversary of the Akuapem rural bank in Mamfe in the Eastern Region last Saturday.

    From 30 rural banks in the 1980’s, there are currently 145 of such institutions with a branch network of about 851.

    Dr Addison said, “The increased number of rural banks has been accompanied by increased customer reach, technology deployment, as well as improved delivery of financial services within the local communities.”

    He said, developing a vibrant financial sector that is capable of harnessing financial resources available for growth and development requires the commitment of all key stakeholders.

    “The Bank will continue to pursue policies and programmes aimed at improving the operational environment to build customer confidence and ensure the stability and soundness of the financial sector,” Dr Addison added.

    Performance of the sector

    He said, “As at the end of  30 June 2021, the overall profitability of the rural banking sector was positive, and the sector recorded an annual growth of 27.4% in total assets, which amounted to GHC6.5 billion. Advances, deposits and investments also increased by 23.6%, 31.2% and 50.1%, respectively.”

    Dr Addison added, “The sector’s non-performing loans ratio declined to 11.5% from 12.3% a year earlier, signalling an improvement in asset quality.

    Implementation of e-cedi

    Central banks around the globe are exploring the introduction of digital currencies and Ghana is among the leading African countries to enter the pilot phase.

    On the implementation of the e-cedi, which is the first general-purpose central bank digital currency in Africa, Dr Addison said, it “will complement and serve as a digital alternative to physical cash, in line with the government’s ‘Digital Ghana Agenda’.

    “The e-cedi will be tested in trial phases with banks, payment providers, merchants, consumers and other stakeholders for a nationwide rollout as it will present an opportunity to build a robust, inclusive, competitive and sustainable financial sector.”

    He added, “We expect that all rural and six community banks will collaborate with ARB Apex Bank to leverage the opportunities available with digitisation within the payment ecosystem.”