Nyinahin (Ashanti Region) - Only 33 out of 115 Rural and Community Banks in the country have complied with the Central Bank's directive to increase their capital levels to a minimum of 100 million cedis.
Mrs Cynthia Abu-Bonsra, Deputy Chief Manager of the Banking Supervision Department of the Bank of Ghana, who disclosed this said the rationale for raising the level of the required paid-up capital was to ensure the provision of a safety margin to protect the bank's solvency, enhance public confidence and reduce incentives for excessive risk-taking.
She was speaking at the 17th Annual General Meeting of Amanano Rural Bank at Nyinahin in Atwima district. Mrs Abu-Bonsra emphasised the crucial and central role that equity capital plays in the stability of all economic activity, adding, "adequate capital does not only serve as a buffer for the absorption of unforeseen risks but also ensures that banks have reasonable working capital and low debt and equity ratio to avert their vulnerability".
She regretted that the Amanano Rural Bank share capital, which stood at 56.3 million cedis, was below the required minimum capital and urged the shareholders to buy more shares. She also advised the directors and management to develop suitable strategies and products that could lead to the activation of the enormous productive potentials of the rural economy, particularly, agriculture and cottage industries.
Mrs Abu-Bonsra was impressed with the general performance of rural banks, disclosing that as at the end of March this year, their total asset base was 556.4 billion cedis. She said total credits channelled into the economy by the rural banks nation-wide stood at 163.6 billion cedis and described it as an indication of the growing public confidence in them.
