Business News of 2014-05-27

Rural Banks must list on GSE

Data Bank is making a strong case for rural banks to conform to emerging trends by listing on the Ghana Stock Exchange to broaden their capital base and enhance their growth and expansion.

A senior analyst and a relationship manager at the bank, Richard Danquah, enumerated a number of advantages, including doing away with the system of offloading shares, that rural banks stood to gain if they listed on the GSE.

But that preposition was fiercely contested by a group of rural bank shareholders led by the Board Chairman of the Nwabiagya Rural Bank, Nana Owusu Sarfo, who said the laws which established the rural banks made it difficult for them to switch quickly onto the GSE.

He said at a JCS Investment Limited organised seminar for shareholders of rural banks last Tuesday in Kumasi that rural banks were unique, serving the needs of a specific group of people, adding that a switch would require a complete overhaul and a second look at the law establishing it.

The day’s seminar, on the theme: ‘enhancing the value of rural banks share as an attractive asset class’ brought together 50 shareholders and key players from the Bank of Ghana, the Security Exchange Commission, Data Bank and ARB Apex to encourage shareholders to have a periodic review of their shares, deal with client protection and corporate governance.

The seminar was organised with support from Nwabiagya Rural Bank and other allied agencies.

A representative from ARB Apex, Enoch Arkaife, applauded the growth of rural banks but said in terms of numbers they were dwindling.

The reason, according to him, in areas where hitherto commercial banks found it structurally impossible to go, they had now found it convenient and were now competing with the rural banks for space and customers.

The structural rigidities in the provision of normal banking services in rural area compelled the Bank of Ghana to promote the concept of rural banks of which the first was establish in 1976 at Nyakrom.

The Head of other Financial Institutions Supervision Department of the Bank of Ghana, Raymond Amanfu, said despite the teething problems that saw 23 of them being liquidated in the early 1990s the number continued to grow, and as of today Ghana had 139 of them.

He urged the rural and community banks to speed up the technology in software and hardware systems, dual control, management of passwords, access to date as well as data transmission which must be closely monitored.

He was optimistic rural and community banks were capable of meeting the exigencies of the time.

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