'Give loans to qualified applicants and the credit worthy' - RCBs advised

Rural and Community banks (RCBs) should endeavour to offer credit to qualified persons as regards favouring unqualified, but related applicants, since the development contributes to the rising statistics of non-performing loan (NPL) ratio among rural banks, Mr. Joseph Akossey has advised.

According to the efficiency monitoring unit (EMU) of the ARB Apex Bank report for the third quarter of 2016, several RCBs had their NPL ratios in excess of the benchmark of 5 percent.

The report captured that the RCB industry NPL was 13.27 percent, which was below the major banks’ ratio of 18.99 percent.

Though this puts RCBs far ahead of the major banks, however, the difference in excess of the benchmark ratio of 8.27 percent still remains a major concern.

This worrying situation, the Head of Proven Trusted Solutions, and an expert in rural banking, Mr Joseph Akossey explained should be tackled with improvement in asset quality of RCBs.

“To improve an asset quality, RCBs should avoid over-financing and under-financing in loans disbursement to clients.”

He asserted that rural banks should ensure on-time delivery of loans because delays in loan processing and disbursement often lead to diversion of loan facilities.

He reiterated that more loans should be given to the right people. “This means that loans should be given to qualified applicants and not those who are unqualified, but have connections with the bank,” he said.

Mr. Akossey also said the steady decline of interest on treasury bills could affect interest on other investment products. This will in no doubt affect RCBs income, especially those who pump much of their funds into investment instead of giving them out as loans.

He cautioned that RCBs should strengthen their credit management structures for improvement of loan asset quality to avoid experiencing shock when interest on investment products get to its lowest point.

The proven trusted CEO, who said in an interview at the backdrop of a training on deposit mobilization, customers service among others for sales executives of Amenfiman Rural Bank, also called for continued capacity training for mobile bankers.

He said mobile bankers are catalyst for RCBs deposit growth, and eye of banks who need regular training to bring professionalism into their work.

The Chief Executive Officer (CEO) of Amenfiman Rural Bank, Mr. Alex Asmah, acknowledged the contribution of the sales executive in susu deposit mobilization which he noted has helped to position the bank as the dominant and largest deposit mobiliser in the rural banking industry.

The branch Network Manager, Mr. Kennedy Amoah, encouraged the sales executive to giver off their best while assuring them of continuous capacity development and reward for the staff.

It was disclosed that the deposit mobilization of the bank, in 2016, amounted to GHS 128 million while a new target of GHS 200 million is expected to be collected by close of the fiscal year, 2017.