Prudent investment strategies critical to growth of RCBs

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The Chief Executive of FLUID – a financial technology firm, Mr. Moustapha Seck, has advised management of rural and community banks (RCBs) to prioritise development and deployment of prudent investment strategies to deepen the competitiveness of RCBs.

Especially given the current economic conditions and challenges confronting the financial sector, Mr. Seck observed that RCBs will need to put in place comprehensive strategies that cover loan advancements to investments, among others, to become more relevant.

This comes on the back of the recent banking sector crisis, wherein some banks including RCBs could not recover investments made in some now-defunct fund management companies in the country.

The FLUID boss, who was speaking on the sidelines of a one-day workshop for managers and board members of RCBs at Sunyani in the Bono Region, asserted that it is the expectation of many to see a more resilient rural banking system in the country.

To this end, he entreated RCBs to have a shift of mindset by making more investments in agriculture and various areas of trade within the rural economy.

FLUID since its existence has worked with several institutions in the country including rural and community banks, helping them improve their deposit mobilisation as well as contributing to financial inclusion.

It has also undertaken several research works in the local banking sector – especially the rural banking sub-sector on how to improve deposit mobilisation, and mitigating credit risks among others.

Explaining the rationale behind this engagement, Mr. Seck noted that “as the economic conditions became more challenging for banks, we recognised the need to create a platform for RCBs to discuss these emerging issues and offer some lasting solutions to them.

“In all, about 16 RCBs out of a total 19 rural banks in the region participated in the workshop; which was held under the theme ‘Navigating the current challenging times’.

The Executive Director of Proven Trusted Solutions, Mr. Joseph Akossey – who was one of the lead facilitators, also reckoned that RCBs need to improve on their service quality. For instance, in the area of loan advancements he said there is a need to eliminate bureaucracies and fast-track the processes.

“Rural banks are in the business of mobilising and lending. So, regarding service quality, customers want quick turnaround times when it comes to loan delivery; and this remains key in making them competitive,” he stated.

To navigate the current challenging times, he said, the discussions focused on adopting certain strategies, key among which is cost-management – that is, tackling the leakages and waste affecting their income.

Also worthy of consideration was the need to offer prudent loans, which is achieved by being able to give loans and manage to recover the principal and interest. “If they give loans and are not able to recover, it will affect the balance sheets. Therefore, whatever loan is given has to be secured; making it possible to be recovered in all eventualities,” he added.

He equally urged RCBs not to just focus on high yields when making investments, but also endeavour to do due diligence.

Furthermore, Mr. Akossey noted that the management of RCBs should not overlook staff performance, management systems and customer satisfaction as their key performance drivers.

He explained that the continuity of staff and implementation of a reward system helps to ensure that set targets are met.

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