SEC regulated investment companies to ‘cough up’ GH¢458 million to pay RCBs

SEC regulated investment companies to 'cough up' GH¢458 million to pay RCBs
Alex Kwasi Awuah, Ag. Managing Director of ARB Apex Bank PLC, addressing General Managers & CEOs of Rural Banks at the just ended Managers’ Conference

The Rural and Community Banks, RCBs, after exhibiting resilience in their operations and battling it out during financial reforms still have a total of GH¢457.86 million locked up with investment companies that are regulated by the Securities and Exchange Commission, Business & Financial Times has learnt.

At the beginning of the reforms, the total amount of funds invested in investment companies in the books of RCBs amounted to GH¢725.04 million. Out of the amount, GH¢648.99 million which is 89.5% was validated.

Total payments received by the affected RCBs both cash and bonds issued as at the end of August 2021 amounted to GH¢190.62 million. Therefore, an amount of GH¢457.86 million which constitutes 71% of the validated investments is still locked up with the investment companies.

In all, 92 rural banks out of the total 145 rural banks currently operating in the country have been affected in varying degrees of adverse impacts.

B&FT has also learnt that some of these investment companies are defunct whereas others are still in operation, yet they are unable to pay the claims of these RCBs as and when they fall due; besides several attempts to request or withdraw these investments have proved unsuccessful.

The Ag. Managing Director of ARB Apex Bank PLC, Alex Kwasi Awuah disclosed these and more at the Managers’ Conference held recently at the Rock City Hotel in Kwahu-Nkwatia in the Eastern Region.

According to him, in the process of resolving the banking sector issues however and through the foresight, influence, and hard work of Governor of the Bank of Ghana (BoG) Dr. Ernest Addison, and his team at the Central Bank, all investments with BoG-regulated institutions have been paid out to the RCBs.

Furthermore, through the support of the ARB Apex Bank, the rural banking industry has successfully managed its liquidity needs and rural bank customers continue to have confidence in the industry.

This year’s conference which is the twentieth in the series was on the theme: “Rural Banking beyond Financial Sector Reforms and the COVID – 19 Pandemic,”

The conference as usual brought together general managers and chief executive officers of the rural and community banks with the primary focus to discuss the current happenings and some challenges in the rural banking sector and proffered solutions to them.

RCBs total deposits have been on the path of growth and recorded an average annual growth of 24% from GH¢2.85 billion at the end of December 2017 to GH¢5.32 billion at the end of December 2020.  Deposits had grown further to GH¢5.70 billion at the end of June 2021.

The Ag Managing Director of ARB Apex Bank has therefore made a humble plea to the Governor of Bank of Ghana to use his good office to help RCBs to retrieve the remaining locked up funds with the SEC-regulated firms.

It is believed that these locked up funds when paid would boost the operations of RCBs and enable them give maximum credit lending support to many micro, small and medium enterprises across the country.

Meanwhile the ARB Apex Bank has subsequently issued Investment Guidelines to the RCBs and began training the banks on taking prudent investment decisions and have entreated all General Managers and Chief Executive Officers to use the document as a guide in taking investment decisions.

ARB Apex Bank PLC has focused on establishing a robust Information and Communication Technology (ICT) infrastructure to serve as a key growth pillar for driving sustainability of the operations of RCBs over the past few years.

ARB Apex Bank and the RCBs are grateful to the Government of Ghana and the World Bank for the funding support of USD$8million under the Ghana Financial Sector Development Project (GFSDP), through which ARB Apex Bank  has so far upgraded their data center equipment in readiness for the full implementation of the Agency Banking component of the support package.

ARB Apex Bank has been intentional in ensuring that the ICT infrastructure they host is enhanced for RCBs to be able to deliver value added digital banking products for their esteemed customers throughout the country.

It is therefore the expectation of ARB Apex Bank that, after implementation, RCBs teeming customers would have the full bouquet of services including mobile and internet banking services.

Furthermore, the desire of all stakeholders in this Project is to position the RCBs properly to lead the Government’s financial inclusion agenda, and ARB Apex Bank’s full assurance of their commitment to the full implementation of the Project.

Management of ARB Apex Bank is therefore encouraging all general managers as well as    chief executive officers to show more commitment to the successful execution of the Project. It is further hoped that these and more would inject a high level of dynamism into RCBs’ operations and prepare the rural banking industry for the expected heightened level of competition in the financial services industry.

Rural Banks in Ghana have exhibited resilience and continue to stand the test of time and have worked in the interest of their customers and shareholders as per their legitimate mandate as banks operating in their communities and serving critical financial intermediation for significant number of the Ghanaian populace.

The Bank of Ghana that regulates the subsector of the banking industry has taken a strong stance to ensure that rural banks, as wholly indigenous financial entities, perform their operations efficiently as required of them, to bring financial inclusion to the members of the communities.

RCBs have not failed to pay customers their deposits or paid investors their money whenever they fall due; even in the midst of the financial clean up and in challenging macroeconomic environment. 

B&FT can confirm that none of the 145 rural banks in the country was closed down or had their license revoked by the regulator because of insolvency or any corporate governance irregularities, as reportedly happened to some of the universal banks when the banking clean-up occurred.

By this, the Head of Business Development, Marketing and Research, of the ARB Apex Bank PLC, Gorden Dery is asking the general public to disregard the malicious information about RCBs making rounds on various social media platforms that RCBs are currently being confronted with liquidity challenges and which is affecting their operations and so customers should start withdrawing their money.

According to Mr Dery, this is untrue and sees it a calculated attempt by some unscrupulous personalities to create fear and panic and possibly damage the operational reliability of the only indigenous banking institution that is committed to the financial well-being of the Ghanaian.

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