Joseph Akossey’s thoughts: How RCBs can remain resilient amid COVID-19 effects


Rural and Community Banks play a vital and unique economic role in rural communities by providing credit to small scale farmers and small businesses, as well as the very low income earner They also support rural development projects through corporate social responsibility activities.

Currently, there are 144 Rural and Community Banks spread across the 16 regions of Ghana. They remain the largest bank branch network with the largest retail customer base. As part of the banking ecosystem, RCBs are vulnerable to external factors such as the COVID-19 pandemic.

Even though it is too early to draw conclusions about full impacts of the COVID-19 crisis on their operations, research conducted by Proven Trusted Solutions has revealed that they have begun to experience a measure of shock. It has been noted that the COVID-19 crisis has a tremendous economic impact. The Bank of Ghana has therefore projected that economic activity will slow down this year due to the pandemic.

For the RCBs to survive in the short-term and also ensure long-term business sustainability, they must stay resilient. This article will therefore discuss strategies the RCBs should implement in order to stay resilient amid this ‘new normal’ time.


  1. Strong liquidity management practice

Considering the fact that we are not living in normal times, the RCBs should have a strong and prudent liquidity management practice in order to mitigate liquidity risk. This implies that they must have sufficient liquidity to meet customers’ withdrawal demands. To achieve this, they should grow their primary and secondary reserves. They should also conduct a regular liquidity stress-testing under a variety of scenarios covering both normal and more severe conditions. Furthermore, the RCBs should review their liquidity models to incorporate a variety of financial scenarios.

  1. Adopt an empathetic banking concept

Empathetic banking suggests that banks should demonstrate genuine care, tender affection, helpful attitude as well as providing other emotional support in their dealings with customers, especially in crisis situations. Due to the uncertainty and disruptions regarding COVID-19, some customers are overwhelmed by anxiety. The RCBs should therefore empathise with customers and also encourage them to avoid fear and panic. The front-line staff of the respective RCBs should do their utmost to advise customers to protect their lives by complying with the various health and safety protocols.

Rural and Community Banks should also offer professional advice to their business customers about what to do to mitigate the effect of the COVID-19 on their businesses. More importantly, business customers who are hard hit by the pandemic should be offered financial relief packages such as loan principal repayment deferral, credit refinance among others.

There is no doubt that adoption of an empathetic banking concept will help our RCBs to capture the minds and hearts of customers. This is due to the fact that customers appreciate banks which show fellow-feeling and care about their welfare.

This will therefore make them loyal, and also engage in positive word of mouth advertising which might attract new customers.

  1. Effective and strong internal control system

The importance of an effective and strong internal control system cannot be overemphasised during this challenging time in which the COVID-19 is exacting a toll on income and profitability of our RCBs. It is worthwhile to note that an effective internal control system will help the RCBs to minimise, and possibly avert, high incidence of fraud, irregularities and other income leakages.

Therefore, it is imperative that Rural and Community Banks strengthen their internal control call-overs among others. In order to overcome internal control lapses, Internal Auditors and Compliance Managers of rural banks must be up and doing, and not behave like sleeping dogs.

  1. Right investment mix

One of the major sources of income for Rural and Community Banks is interest income from investment. There are four major areas where Rural and Community Banks put their investment.

They are: Fund Management Companies, the ARB Apex Bank Limited, the Universal Banks and the government of Ghana Treasury bills. Besides the area to put their investments, RCBs take into account duration of the investment – such as 91-days, 182-days or one-year.

In order to stay resilient, Rural and Community Banks should spread their investments and not put all their eggs in one basket. It has been argued that diversification reduces risk, because when one institution suffers the impact will be minimal.

Furthermore, they should not look at the rate alone but more importantly the safety of their funds. In other words, they should focus on return of capital and not return on capital.

Rural and Community Banks usually apply the KYC policy during the account-opening process for new customers. Similarly, they must do due diligence when it comes to decisions to invest. Board and Management of RCBs should appreciate the fact that bad investment has serious repercussions. In a worst-case scenario, it could cripple the bank. Rural and Community Banks should have good investment policies which outline where to invest, who should be responsible for investing the funds among others. This will go a long way to eliminate situations where investments are made based on self-interest.

In order to ensure that the investment policy is adhered to, Internal Auditors and Compliance Officers should do effective monitoring.

  1. Ensure robust credit administration

In order to record strong asset quality by way of keeping low non-performing loan ratios (NPL) amid the COVID-19 crisis, the RCBs should have robust credit administration. To achieve that, they should improve their credit appraisal process, credit monitoring and recovery.

The pandemic is currently taking a toll on some businesses which might impact loan repayments. Therefore, lending to businesses that are hard-hit should be backed by effective credit appraisal in terms of financial and economic viability of the project for which purpose the credit is required.

  1. Good corporate governance practices

Good and effective corporate governance practices have been noted as critical in building a resilient rural banking regime.
It has been argued by banking experts and the Bank of Ghana that poor corporate governance was one of the key underlying factors which accounted for the recent demise of some banks and specialised Deposits Taking Institutions. This underscore the importance of ensuring that better corporate governance principles and practices are promoted in Rural and Community Banks, especially in this critical time.

At the board level, directors should exercise effective oversight over the activities of management. They should also give better policy directions that will propel long-term business sustainability.

Furthermore, they must ensure that some current policies are reviewed to make them relevant and effective amid the current crises.

Additionally, Directors should actively contribute better ideas at board meetings to enhance performance, as opposed to being dormant and only interested in sitting allowances. In line with good corporate governance, directors should not take over management by interfering in day-to-day administration of their respective banks.

Shareholders of Rural and Community Banks should ensure that people who are knowledgeable, competent and have high integrity are elected to serve on the board. I would like to urge directors of rural banks to do their best to appreciate new developments and trends in the banking industry. In line with that, directors should be abreast of the Banks and Specialised Deposit Taking-Institutions Act 2016 (ACT 930), Ghana Deposit Protection Act 2016 (ACT 931), the New Companies Act 2019 (ACT 992) and other directives from the Bank of Ghana.

  1. Right attitude of staff

Employees’ attitude is crucial in the service industry due to service characteristics such as inseparability and perishability. The profit chain model developed by Harvard Business School points to the fact that employees’ attitude has positive impact on organisation performance. Staff of RCBs should therefore exhibit the right attitudes, such as strong commitment, being hardworking, honesty, positive attitude among others.

To stay resilient amid the COVID-19 crisis, staff of the 144 RCBs should become brand ambassadors of their respective banks by promoting the brand through formal and informal means. This will enhance the brand equity and also attract new customers and deposits. They must think of what they can offer their banks to improve key performance indicators and not be obsessed with monthly paychecks, allowances and bonuses.

Furthermore, employees of Rural and Community Banks should ensure that their academic and professional qualifications are reflected in their performance so as to enhance the overall performance of our banks. As we live in challenging times, it is vitally important for all staff of RCBs to have the willingness to do more than they get paid for. Management and staff of RCBs should ask themselves the following questions:

  • What sacrifice can I make for my bank to stay afloat in this critical time?
  • Am I contributing more than what I receive at the end of the month?
  • How can I support my bank to improve on its financial soundness indicators such as CAR, deposit, asset quality, cost to income ratio among others?
  1. Effective marketing strategy

Rural and Community Banks must implement effective marketing strategies to mobilise more deposits and attract new customers. According to available data, the total assets of the rural banking sector as a percentage of the Universal Banks asset size was less than 4% as of December 2019. This suggests that there is a need for rural banks to be more aggressive in deposit mobilisation so as to grow their asset size.

Going forward, rural banks should consider the need to have a solid marketing department responsible for the following: developing marketing strategies and plans, capturing marketing insights, building strong brands, developing new products among others.


Thus far, this article has discussed the strategies that rural banks can implement to stay resilient amid the COVID-19 crisis. I strongly hope and believe that boards and management of RCBs will read and digest this article and apply the key points.

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