BOG concern about credit management procedures

Kumawu (Ash), Sept. 21, GNA -The Bank of Ghana (BOG) has observed with concern the unsatisfactory credit management procedures in most rural banks in the country.

It said rigorous credit appraisal, monitoring and supervision were either non-exsistent or poorly carried out in most banks. Mr Boyd Donkor, Deputy Chief Manager of the Banking Supervision of BOG, made these observations at the ninth annual general meeting of shareholders of the Kumawuman Rural Bank at Kumawu, on Saturday. He said the effect of these were the gradual deterioration in loan asset quality with its attendant effect on liquidity and profitability of the banks.

Mr Donkor, therefore, urged rural banks to strengthen the credit management function so as to drastically reduce their non-performing loans and advances.

He also expressed concern about weaknesses in the internal control systems in most banks and urged management to ensure that internal auditors were uniquely positioned to ensure good corporate governance, sound financial reporting and disclosure controls and risk management practices of the banks functioned effectively.

Mr Donkor commended the board and management of the bank for its performance and said the BOG would continue to exercise its monitoring and supervisory functions over rural banks in the most efficient manner and also provide support towards achieving improved performance.

He urged the directors, management and staff of the bank to take advantage of the improving macro-economic environment to re-align the operations of the bank in order to enhance its overall result. Mr G.E. Amoah, Chairman of the Board of Directors of the bank, said the bank made a pre-tax profit of 252.3 million cedis this year, compared to 182 million cedis, made in 2001.

He said total operating income rose from 1.526 billion cedis in 2001 to 1.731 billion cedis in 2002, showing an increase of 13.43 percent, while shareholders funds also rose significantly from 283 million cedis in 2001 to 559 million cedis in 2002.

Mr Amoah, however, expressed concern about the abysmal low capital base of the bank and urged the shareholders to buy more shares to enable the bank to meet the BOG capital base requirement of 100 million cedis