Bank of Ghana works towards strengthening rural banks internal control

Repay poverty fund or face prosecution - Bank warns

Check weak internal control systems in rural banks

Wamfie(Brong Ahafo) 29 Nov ’99

The Bank of Ghana has created a pool of experienced managers to strengthen internal control mechanisms of Rural Banks in order to reduce fraud.

Mr. Daniel Ohene Owusu, a manager at the Banking Supervision of the BOG, managers who had been at post for years without leave, will be relieve by members from the pool.

The aim is to enable rural bank managers to go on leave annually to enable the relieving managers to detect possible concealed frauds.

Mr Owusu said this at the 17th Annual General Meeting of the Wamfie Rural Bank at Wamfie in the Dormaa district on Saturday.

New rural banks are now expected to raise 100 million cedis as capital while existing ones are to increase their capital base to 30 million cedis before they would be allowed to continue operation.

Mr Owusu said the BOG was committed to systematic growth of rural banks as "it is one of the surest ways of helping to create wealth, employment and stimulate development in the rural areas".

The bank, he said, would therefore do everything to ensure that "rural banks operate strictly in accordance with the law".

Mr Owusu expressed the BOG's strong objection to the growing practice where some rural banks on their own, enter into loan agreements for the supply of equipment, without permission from BOG.

Mr Owusu reminded rural banks of the BOG's directive that they should concentrate their activities in the rural areas because "their foray into urban centres has forced them to grant loans to big time urban businessmen to the detriment of rural dwellers".

He cautioned against using part of their treasury bills, which are statutory reserves, as a guarantee for seed money for the purchase of cocoa.

The vice-chairman of the bank, Mr Edward Asante, said the bank made a profit of 31 million cedis last year as against 22 million cedis in 1997.

Mr Asante said the bank has entered into an agreement with Tano Clay Products Limited for the supply of building materials to salaried workers.

The Dormaa District Chief Executive, Mr Kwadwo Boateng, said the assembly has set up a bursary to help citizens entering tertiary institutions.

He commended the bank for setting up a scholarship scheme for secondary schools and urged it to expand the scheme to cover tertiary students in order to reduce the pressure on the assembly.

In another development, the Brong Ahafo Regional Minister, Mr Donald Adabre, advised rural banks to make it mandatory for managers and other top personnel to take their annual vacation leave each year.

He said this would not only give "these officers enough rest to refresh their minds and energies but would also allow for early detection of fraud and other irregularities within their operations."

In a speech read for him at the 14th Annual General Meeting of shareholders of the Nsoatreman Rural Bank at Nsoatre on Saturday, Mr. Adabre cautioned rural banks against the tendency of rushing to open branches and agencies when they can barely find their feet.

He urged them to give priority attention to the economic development of communities in which they operate, by offering them credit facilities, saying that "after all that is the main concept of the rural banks."

Mr Adabre commended the Nsoatreman Rural Bank's role for supplementing the government's human resource development efforts by "channelling a chunk of

its resources to enhance education in the region".

Mr King Kusi Asomah, chairman of board of directors, reported that the bank made a net profit of 173.6 million cedis during the 1998 fiscal year as against 34.8 million cedis in the previous year.

Mr Asomah said the bank's assets increased from 3.6 billion cedis in 1997 to five billion cedis during the year under review while its deposits grew from 1.8 billion cedis to 2.56 billion cedis during the same period.

The bank granted loans totalling 2.8 billion cedis to 16,000 customers of which 75 per cent were women to support their businesses.

He said shareholders would be paid 10,000 cedis a share, in the hope of raising the bank's share capital to 100 million cedis to qualify for upgrading into a community bank.

Thirty Junior Secondary School pupils and six Senior Secondary School students were awarded scholarships and two out of five SSS students who benefited from the scheme gained admission into university, Mr Asomah said.

GRi../

Gomoa-Dawurampong (Central Region) 29 Nov. ’99

The Akyempin Rural Bank at Gomoa-Dawurampong in the Gomoa District, has given beneficiaries of the poverty alleviation fund in the area up to two weeks to repay the loan or face prosecution.

Mr Kingsley Kwame Owusu-Ansah, Senior Manager of the bank gave the warning at Dawurampong on Saturday.

Addressing defaulters of the scheme he explained that the amount given them were part of a revolving loan to assist individuals to initiate small-scale economic ventures.

He said other needy people in the district could also benefit only when they repay their loans.

Discard the notion that they money was a 'gift', he said.

Mr Owusu-Ansah said the government might increase the allocation if beneficiaries manage their loans judiciously.

The bank regard the package it administered for the District Assembly as a normal bank loan and would apply its recovery procedure to retrieve the loans, he warned.

GRi../

Return to top

Foase (Ashanti Region) 29 Nov. ’99

Directors of Rural Banks have been asked to firmly tackle the weak internal control systems "to check creeping theft of customers monies".

Mr Eric Osei-Bonsu, a Director of the Association of Rural Banks, said fraudulent practices in the operations of some rural banks are leading to the loss of customers’ deposits, which should give cause for concern.

Addressing the 18th annual general meeting of shareholders of the Atwima Rural Bank at Foase, Mr Osei-Bonsu urged the banks to recruit internal auditors to ensure early detection of fraud and infuse sanity into their operations.

He identified poor loan administration as one of the major drawbacks to creditable performance of rural banks and asked the directors to take a critical look at prudent credit management.

He praised the Atwima Rural Bank for its tremendous progress over the years and called on the shareholders to increase the bank's share capital base.

The bank made a profit of 102.9 million cedis on its operations last year, representing an increase of about 48 percent over the previous year's profit of 80.5 million cedis, Baffour Appiah Dankwah III, Anantahene, and Chairman of the Board of Directors, announced.

The Board Chairman said the bank has set aside 9.6 million cedis to be paid as dividend to shareholders.

GRi../

Return to top