Understand your bank, community and customers – BoG advises RCBs

Rural and Community Banks: Understand your bank and customers

The Bank of Ghana (BoG) has entreated heads of Rural and Community Banks (RCBs) to endeavour to position themselves so they are able to address emerging issues within the rural banking sector.

The Head of Other Financial Institutions Supervision Department at the Bank of Ghana, Mr. Yaw Sarpong, who delivered an address on behalf of Bank of Ghana Governor Dr. Ernest Addison, said the position comes with a lot of responsibility and trust is conferred by directors, shareholders, customers and the community at large.

In view of this, he stated that they are obligated to honour this trust and judiciously protect the best interests of shareholders and customers to ensure sustainability and progress of the rural banks they oversee.

To realise this, he charged heads of RCBs to understand their bank, community, customers and the operating environment so as to respond decisively to emerging issues.

Also, he opined that they should hold themselves and their staff to the highest ethical and performance standards while embracing technology to reverse the trend of being highly susceptible to fraud such as cash suppression, as reported in the recent 2020 Banking Industry Fraud Report, as this could derail all their efforts.

Mr. Sarpong said they should be transformational leaders who build resilient, sustainable and profitable rural and community banks which meet the expectations of stakeholders.

Speaking at the 20th National Managers’ Conference of Rural and Community Banks and ARB Apex Bank at Nkwatia-Kwahu, he recognised that the current business environment is witnessing rapid technological innovation, increased access to information, customer sophistication, among others.

These driving factors have caused major disruptions in the financial sector, with an influx of innovative products and services which have changed the way customers access financial services.

Some remote places in the country, which were once thought inaccessible to financial services, are now within reach – all through mobile technology.

All of these, he said, have far-reaching implications for the banking industry; particularly for rural and community banks.

These changing circumstances, he said, presents both risks and opportunities to the banking sector and also to rural and community banks – and therefore this requires targetted policies, strategies and prudent management of these institutions.

To address protracted gaps within the rural banking sector on the issue of good corporate governance and prudent risk management, he said, the BoG came out with the Corporate Governance Directives and Risk Management Guidelines for rural and community banks.

The Corporate Governance Directives seek to establish sound corporate governance and risk management principles for efficient operations within the rural banking sector.

The Directive is also expected to advance governance systems to create a conducive environment for the rural banking community to serve the best interest of depositors and other stakeholders, and enhance overall corporate performance, accountability and public trust.

In addition, the Risk Management Guidelines seek to provide a comprehensive risk management framework that will enable rural and community banks to pursue sound risk management practices in their operations.

BoG has therefore set March 31, 2022 as the effective date for implementing all sections of the Corporate Governance Directive.


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