Commercial Bank to Mop Up Rural Cash

The Deputy Governor of the Bank of Ghana (BOG), Mr Emmanuel Asiedu-Mante, on Monday said that even though policy measures adopted by BOG have helped reduce money outside the banking system, statistics indicate that currency with the non-bank public is still high.

He said as at the end of July, money outside the banking system amounted to 1.6 billion cedis, forming 31 per cent of the total money supply of the country.

"Large cash holdings outside the banking system puts inflationary pressures on the economy and blunts the capabilities of the instruments of monetary management."It is the hope of the Central Bank that the banks will intensify their deposit mobilisation drive to mop up the excess liquidity in the hands of the non-bank public", he said at the Ghana Commercial Bank's (GCB) trio-product launch- "Save and prosper", "Kudi Nkosuo" and "FODEM" accounts in Accra.

The new products are aimed at improving GCB's deposit mobilisation process and aiding Ghanaians at home and abroad to mobilise resources that would strengthen the economy and stimulate the development of the private sector at the micro economic level.

They also seek to reduce money circulation outside the banking system by carrying banking to the doorsteps of people in rural areas, facilitate the provision of employment for people in the informal sector and to encourage Ghanaians abroad to keep their wealth in Ghana.

Mr Asiedu-Mante said as BOG strives to keep inflation at bay as a means of ensuring the stability of the exchange rate, banks should not only link their deposit rates to the falling inflation and treasury bill rates but also let it impact on their lending rates.

This would help promote expansion in the private sector and cause an increase in domestic savings.

Mr Asiedu-Mante said the products put on offer by the GCB are in line with the government's policy of rural development and BOG's own policy to reduce money outside the banking system to stimulate economic growth.

"This falls in line with government policy to mobilise more foreign exchange and provide a platform to tap the growing wealth accumulated by Ghanaians abroad".

Mr Asiedu-Mante said the development of new financial products and services to enhance efficiency in the banking system calls for extra vigilance on the part of regulators and supervisors.

In order to ensure that the financial system remains stable and efficient, he said the regulatory and supervisory laws would be constantly reviewed to respond to current developments in terms of establishing effective controls over each aspect of technological systems and the ability to maintain proper standards, policies, procedures to prevent fraud and all categories of risk.

The Deputy Governor said the BOG would support both banks and financial institutions to develop programmes and strategies aimed at deepening the financial system for the rapid growth of the economy.

Mr William Panford Bray, GCB's Managing Director said the "Kudi Nkosuo" account is meant to establish a link between the bank and potential low-micro entrepreneurs and has both large savings and credit component.

The saving's component is to build up assets while the credit component is to expand business.

The "Save And Prosper" account, he said, is the transfer of the bank's financial planning skills to customers targeted at the middle group of fixed income earners or salaried workers.

It will be used as a basis to provide credit, the repayment of which will be equal to a customer's regular savings.