Bank of Ghana would close down distressed banks if …

The Bank of Ghana (BOG) will continue to liquidate all distressed banks to allow only efficiently and effectively managed ones to operate. Mr Emmanuel Asiedu-Mante, head of the Banking Supervision Division of the BOG, who announced this, said banks are established to operate and contribute to socio-economic development.

He was addressing the Ninth Annual General Meeting of shareholders of the Amansie West Rural Bank at Antoakrom in the Amansie West District of Ashanti on Saturday.

Mr Asiedu-Mante said that, last year, three major banks - Bank for Credit and Commerce, Bank for Housing and Construction (BHC) and the Co-operative Bank - were liquidated. Within the same period, however, two new banks, STANBIC and Amalgated Bank, were given the licence by the Central Bank to operate.

In addition, 23 out of the 111 rural banks operating in the country were liquidated and two others have been given the warning to improve on their performance or they would be liquidated by the end of March.

He said research undertaken by the BOG indicated that the poor performance of rural banks was the result of inefficiency on the part of the boards of directors, management, poor patronage by people within its catchment area and the inability of both the board and management to recover loans granted to their customers.

Mr Asiedu-Mante pointed out that loans are granted to customers based on their ability to repay them within specific periods, and appealed to workers of the rural banks to accept loans that they could repay within their means and salaries.

He announced that the BOG would soon publish the borrowing and lending rates of rural banks similar to the major banks in the mass media to enable the people in the rural areas to become aware of the rates at their banks.

Captain Moses Kyerematen (Rtd), Chairman of the Board of Directors of the bank, appealed to the government to set up a special task force to monitor the operations of all private cocoa purchasing companies in the country.

He noted that these companies have abused the Akuafo cheque system introduced by the previous government. They are also cheating the farmers and preventing them from having financial assistance from the banks to expand and increase their production or obtain scholarships from the banks since there are no records on their purchases.

Capt. Kyerematen said despite these problems, the bank purchased cocoa worth about five billion cedis during the 1998/99 cocoa season as compared to two billion cedis during the 1997/98 season.

He said with the introduction of a "susu" scheme for its customers, it managed to increase its deposit base to about 62 million cedis, made treasury bill purchases of about 1.6 billion cedis in 1999 as compared to 835 million cedis in 1998.

The chairman said that, despite the problems which affected the bank in 1998 when armed robbers broke into it and made away with about 35 million cedis that has been refunded by the State Insurance Company (SIC), it managed to grant loans totalling about 1.3 billion cedis to its customers.

These included workers, farmers, traders, transport operators and cottage industry entrepreneurs. Capt. Kyerematen assured the shareholders that the bank would continue to assist in the development of communities within its catchment area and offer scholarships to needy students in the area.