INTRODUCING RURAL BANKING TO THE WEST AFRICAN SUB-REGION
The mission of this delegation is to introduce to you the rural banking system which is currently operating very well after 33 years of its introduction. Other parts of the world, notably the Netherlands and the Philippines have had tremendous benefits out of their rural banking system. The search for a system to tackle the financial problems of the rural dweller started as far back as the 1960s under the Nkrumah regime. During that period, the need for a veritable rural financial system in Ghana to tackle the needs of small scale farmers, fishermen, craftsmen, market women, traders and all other micro-enterprises was felt. The need for such a system was accentuated by the fact that the bigger commercial banks could not accommodate the financial intermediation problems of the rural poor as they did not show any interest in dealing with these small scale operators. Attempts in the past to encourage commercial banks to spread their rural network and provide credit to the agricultural sector failed to achieve the desired impact. These banks were rather interested in the finance of international trade, urban commerce and industry. There was therefore a yawning gap in the provision of institutional finance to the rural agricultural sector. The inability or failure of the commercial banks to lend on an appreciable scale to the rural sector attributed to the lack of suitable security on the part of the rural dweller. Secondly, the centralised structure of the banking set up was such that vital decisions were taken at their head offices, making decentralisation less effective. The disadvantage of such a system was that it could not compete with the local money lenders in terms of local knowledge flexibility and speed of response for financial support from customers. Thirdly, the branch network of many banks cover mainly the commercial areas where business is thought or seen to be vibrant and did not reach down to the rural communities. Rural dwellers were therefore denied access to organised financial institutions in addition to being prevented from availing themselves of the opportunity of safe guarding their money and other valuable property that a bank provides. The realisation that the existing framework for institutional credit did not favour rural development let to the search for a credit institution devoid of the disabilities of the existing banking institutions but possessing the advantages of the non-institutional credit organisations. This institution is what we call the RURAL BANK. * CHARACTERISTICS OF RURAL BANKS
* A rural bank is owned by the people in the rural community within which it operates. * It is permitted to operate within forty kilometres radius from its head office. * It operates according to the dictates of the banking law and has primary and secondary reserve requirements. * Its shareholders are mainly from its catchment area. * It has a board constituted among the shareholders and operates on the principles of the Companies Code, 1963 Act 179 and the Banking Law 2004, Act 673. * Each rural bank is also registered as a limited liability company and requires a banking licence and a certificate to commence business before it is permitted to operate. * It has a minimum paid-up capital set by the Central Bank. * There are existing guidelines for establishing a rural banking relating to the following:- * Eligibility / Qualification criterion...