Six rural banks in Brong Ahafo petitions against SIF

Sunyani, Jan 20, GNA - Six rural banks in Brong Ahafo have petitioned against conditions of the Social Investment Fund (SIF) and have made certain proposals for consideration before the disbursement of funds.

At a press conference in Sunyani, Mr Kwaku Poku, Chairman of Kintampo Rural bank, said the group "disagrees with the issue of automatic debiting, where rural bank accounts held at ARB APEX BANK will be debited directly with interest charges on a quarterly basis". Mr Poku signed the petition on behalf of the chairmen and managers of the six banks, namely Kintampo, Nkoranza-Kwabre, Ahafo Community, Wamfie, Nkoranman, Amantin/ Kasei.

The participating banks are suggesting that their accounts with ARB APEX bank are not debited automatically with principal or interest until amounts recovered from clients (beneficiaries of the SIF) are transferred to the coffers of the parent body, Mr Poku said. The group also considered that the interest charges by the SIF programme, currently at 34 per cent was very high as compared to their average prevailing rate of 30 per cent.

Flanked by some of the Managers of the banks, Mr Poku noted, "The high interest rate will not reduce poverty but will rather compound the existing poverty levels in our catchment's areas and also result in default by clients".

The banks are proposing that interest charges be 25 per cent and to be shared as follows: APEX BANK 10 per cent, District Assemblies Five per cent and participating banks 10 per cent, he said, adding that RIP, another poverty reduction scheme was charging Five per cent below the Bank of Ghana rate.

Mr Poku said the banks felt it was unfair for them to take full responsibility for clients default since the risk of default in the rural areas was very high.

ARB APEX BANK, District Assemblies and the participating banks should share this responsibility, he explained. Mr Poku said the arrangement to deduct interest quarterly from the participating banks was also unfair, since "farmer loans for instance, take at least six months to reap dividends, so banks should be given a six months grace period before any interest is deducted".