The ARB Apex Bank Limited has applauded the decision by government to commence payment of locked up investments in collapsed Fund Management Companies, describing it as a major boost to strengthen the liquidity and balance sheets of rural and community banks (RCBs).
The Registrar-General’s Department, Official Liquidator of Fund Management Companies, has announced that it has begun paying locked-off funds of investors in the collapsed Fund Management Companies. According to the Registrar-General’s Department, the bailout funds for the first batch of investors started on 7th October, 2020.
The Securities and Exchange Commission (SEC) in November 2019 revoked the licences of 53 fund management companies, and most RCBs have their investments with those affected companies.
In an interview with the B&FT, the Deputy Managing Director of ARB Apex Bank, Alex Awuah, said: “It’s is refreshing to know that payment has started. This is going to help RCBs a lot; a significant portion of locked up funds were with the SEC-regulated companies, and we expect that now that they are releasing the funds it will give us a major boost. Banks can unwind provisions that they made, which will therefore reflect in their P&L statements”.
In the midst of shocks that emanated from the coronavirus pandemic and the impact of locked up funds, Mr. Awuah advised RCBs to prioritise liquidity management in order not to run into liquidity challenges that bedevilled some banks.
He said: “When you receive these monies and are doing investments, you should have it at the back of your mind that whatever investment you wish to do must be prudent to avoid reoccurrence of locked-up funds. We also advise that whenever they want to do placement with a financial institution, they should seek advice from ARB Apex Bank; this is in line with the provisions stipulated in Apex Bank regulations”.
The Deputy Apex Bank MD was speaking on the sidelines of the 16th biennial general meeting of the Bono, Bono East and Ahafo chapter of the Association of Rural Banks held at Dumasua near Sunyani. He urged the public to continue reposing confidence in RCBs as trusted vehicles for achieving financial inclusion and development, especially among the rural folk and lower income earners.
Addressing the gathering, Mrs. Comfort Owusu – Executive Director of the Association of Rural Banks, said another pressing issue retarding the growth of RCBs is the increase of corporate income tax from 8% to 25%, saying: “Apart from the locked up funds, another matter of concern that is impeding the steady growth and development of RCBs is the hike in corporate tax”.
She observed that the situation has significantly impaired the provision of corporate social responsibility initiatives, thus lowering the image and influence of the banks in their localities. She also stated that the 25% corporate income tax has starved banks from paying appreciable dividend as rewarding motivation for existing and potential shareholders. Investment in expansion and giving facelifts to banking halls, including modernising operations, have slowed down she added.
Touching on human resource development, Mr. Owusu indicated that the Association in collaboration with the GIZ is organising managerial training and leadership capacity development for lower and middle-placed female management of the banks’ staff.