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GHS14 billion financial sector cleanup: We are recording low profit margins- Rural banks Lament

Rural Banks in Ghana have revealed they are recording lower profit margins as a result of the banking sector cleanup carried out by the central bank.

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The cleanup exercise in the financial sector which commenced
in 2017 is said to have cost the Ghanaian taxpayer about GH¢14 billion.

Though the cleanup led to the collapse of some universal
banks in the country, the Bank of Ghana has reported an increase in the profits
and standing of remaining universal banks. However, it has emerged that the
situation is the opposite for rural banks.

Speaking at the 7th Annual General Meeting of Maltaaba Rural
Bank in Bongo in the Upper East, Upper East Regional Manager of ARB Apex Bank
Limited Zinzendorf Pascal Nkulenu disclosed that rural banks have been
negatively affected by the cleanup up following the lock up of their funds with
investment houses.

“Bank of Ghana embarked on a comprehensive reform
agenda, with the objective of cleaning up the banking industry and
strengthening the regulatory and supervisory framework for a more resilient
banking sector. These reforms have had significant impact on the banking sector
as a whole with figures showing increase in profitability for most universal
banks. The story however is different for the rural banking sector, as the
locked up funds of almost all the rural banks in various investment houses that
have been affected by the cleanup exercise, has led to lower profit margins for
most rural banks,” he mentioned.

Mr Nkulenu who delivered the address on behalf of the
Managing Director of ARB Apex Bank Mr. Kojo Mattah appealed to government to
speed up the intervention aimed at leading to the recovery of some if not all
the locked up funds of the struggling rural banks.

He added that “I want to use this platform to send a passionate appeal to the government to urge the Securities and Exchange Commission as well as the Receiver for the liquidated finance houses, to quicken steps to ensure that all RCB locked up funds are released to them as soon as possible to aid their operations.”

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The Maltaaba Rural Bank, formerly Bongo Rural Bank ended the
2018 financial year with a recorded profit before tax of GH¢ 346,463.00
representing an increase of about 16% year-on-year.

Source:MyNewsGh.com/Stephen Zoure/2020

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