Commercial banks could not escape the devastating impact of the COVID-19 pandemic, as their profitability growth was slashed by more than half, the Banking Sector Report (MAY, 2020) indicates.
However, rural banks are fortunate to be on the other side – recording a surge in deposits. Board Chairman for Okomfo Anokye Rural Bank-Kumasi, Kennedy Obiri-Yeboah, stated that his rural bank had actually experienced an increase in customer deposits after the lockdown was lifted in April this year.
This development, he notes, will help them reach their highest deposit target of GH¢60million by the end of June, from the previous GH¢55million before the lockdown.
Mr. Obiri-Yeboah attributed the spike to the bank’s ability to sustain withdrawals by targeting businesses in viable industries during the pandemic. This interesting revelation was made during the third edition of the ongoing Webinar Series organised by Krif Media Limited, publisher of Integrity Magazine, with the theme ‘The Effects of COVID-19 on Corporate Ghana, with the focus on Rural banks’.
Rural banks play a critical role in the rural economy by providing accessible credit and banking facilities for marginalised communities in the rural setting, and their resilience amid the COVID-19 pandemic is exemplary and demonstrates that rural banks have a role to play in formalising the economy.
Owing to their resilience, rural banks ought to be introduced to next generation technologies such as the use of digital platforms like E-banking, and using live chats for additional customer support.
The pandemic has seen the increased use of digitization, and rural banks should not be left out of such developments.
Additionally, the Amenfiman Rural Bank extended credit of over GH¢32million to more than 10,000 farmers using both individual and group-lending strategies. Therefore, rural banks provide crucial assistance to farming communities; and without such support, rural communities would be hard-pressed and rural folk would have to travel long distances to access banking services.
It is worth noting that several rural banks have committed resources amounting to several thousands of Ghana cedis to support their communities and the Health Ministry, in the form of cash and non-cash items such as PPEs toward the fight against the pandemic.
The Association of Rural Banks Ghana (ARBG) is calling on government to support the RCB sector to be strengthened to take up more risks involved in funding farmers and MSMEs post COVID-19.
They also request stimulus packages in the form of a special fund for RCBs for on-lending to their customers in the MSME and agriculture sector.