The Executive Director of Association of Rural Banks, Ghana Mrs. Comfort Owusu, has advised Rural and Community Banks (RCBs) to ensure a robust credit administration in order to improve their asset quality and avoid the high incident of non-performing loans.
This follows the 2nd Quarter Report, of the Efficiency Monitoring Unit of the ARB Apex Bank Limited, which revealed that the number of RCBs with non-performing loans is not encouraging and above the maximum benchmark of 5 percent.
This development, according to Mrs. Owusu, implies that there is a need for improvement in asset quality, of RCBs.
Speaking at the 14th Biennial General Meeting of the Association of Rural Banks, Ashanti Chapter, she observed that for banks to be resilient, it must be highly liquid. This, she said will ensure that depositors will continue to have access to their deposits.
Mrs. Owusu, therefore, charged Directors and General Managers of RCBs to put in place strong liquidity management practices. “In doing so, our banks should try to meet the regulatory primary and secondary reserves ratios,” she said.
Given the challenges of profitability that RCBs are facing, she entreated General Managers to endeavour to deploy the limited resources available efficiently and effectively to maximize shareholder value.
Commenting on the theme of the event, “Building resilient Rural Banking Sector: The Role of Directors, General Managers / Chief Executive Officers,” she stated that the recent financial sector reforms and COVID-19 crises have demonstrated the need for banks to build resilience.
She said the number of financial institutions in the country currently are disrupting the banking space through digitised financial products and services, indicating the competitiveness nature of the banking industry.
To gain a fair share of the market and be able to survive, she said RCBs need to become robust, strong and resilient.
She also charged Directors and CEOs / General Managers to endeavour to play their role to make this achievable, by improving reserves through ploughing back of profits.
“This means that in good times, we should ensure that more profits are retained in our banks so as to boost reserves (income surplus). This will go a long way to improve the net worth and Capital Adequacy Ratio (CAR). By improving reserves, our banks will improve their resilience to withstand external shocks,” she said.
Mrs Comfort Owusu, Executive Director, Association of Rural Banks Ghana