BoG urges RCBs to comply with new corporate governance directive

small businesses,
Mrs. Elsie Addo Awadzi, 2nd Deputy-Governor, Bank of Ghana

The 2nd Deputy Governor of Bank of Ghana, Elsie Addo Awadzi, has urged Chief Executive Officers and Directors of Rural and Community Banks to strictly comply with the new corporate governance directive for rural and community banks.

This directive was issued under the powers conferred on the Bank of Ghana by sections 56 and 92 of the Banks and Specialised Deposit-taking Institutions Act,2016 (Act 930) and is applied to Rural and Community Banks (RCBs).

According to the 2nd Deputy-Governor, the directive seeks to promote higher standards of corporate governance and risk management to help strengthen the safety, soundness and resilience of RCBs, and ultimately the safety of their depositors’ funds and the entire financial system of the economy. And directors of rural banks must take their oversight responsibilities under the law very seriously.

However, quite a number of the RCBs are yet to fully comply with the directive – in which she has emphasised that good corporate governance is a shared responsibility for all key stakeholders.

She has also added that shareholders of RCBs are required to contribute adequate capital to fund their banks’ operations, and must appoint directors who meet the Bank of Ghana’s ‘fit and proper’ test and can effectively steer the affairs of their banks.

Mrs. Elsie Addo Awadzie sounded these words of caution while advising CEOs of rural and community banks in her address at the just-ended 21st Annual CEOs Conference held last Friday at Ho in the Volta Region, on the theme ‘Positioning Rural Banking at the Centre of Financial Services Delivery in Ghana – The Role of Stakeholders’.

She further reminded directors of RCBs that membership of the board of an RCB – or any other entity for that matter, is not for personal prestige but rather carries a significant burden of personal and collective responsibilities and liabilities.

Mrs. Addo Awadzie emphasised that board members must put in place strategic plans that are well-executed by management, with appropriate risk management, transparency and accountability.

She lamented that the Bank of Ghana is worried it continues to receive many petitions from whistle-blowers alleging serious acts of impropriety involving directors and senior management of RCBs. “We expect that these will be a thing of the past as RCBs fully comply with the corporate governance directive,” she added

The 2nd Deputy-Governor holds a strong belief that the RCB sector must adopt sustainable banking practices, while leadership of the banking industry subsector works seriously toward repositioning RCBs at the ‘centre of financial services delivery in Ghana’ as suggested by this year’s theme of the annual CEOs’ Conference.

In November 2019, the Bank of Ghana launched Ghana’s Sustainable Banking Principles in collaboration with the Ghana Association of Bankers and the Environmental Protection Agency after years of research, study tours and technical work with support from the International Finance Cooperation. Universal banks are already implementing these principles, which require them to manage Environmental, Social and Governance (ESG) risks in their operations.

The central bank 2nd Deputy-Governor wants RCBs to use their lending power to promote cleaner and more environmentally sustainable ways of doing business in their various communities; and promote social inclusion through lending to women, youth and other marginalised groups, so that no one is left behind.

They must also reflect ESG principles in their internal policies to reduce their own carbon footprint, and promote more gender diversity in their leadership. By this development, Mrs. Elsie Addo Awadzie has registered her dissatisfaction with the very low number of women in leadership positions: there are currently only 10 female CEOs among the 147 CEOs representing the RCB subsector of the banking industry.

Wondering where the women were, she stressed that gender equity in leadership will have immense benefits for the sector and for banking customers. She mentioned that this development is for good business, as well as being one clear area in which a change is really needed.

Leave a Reply