Volta Region rural banks appeal for review of withholding deposits policy
The Volta Region Chapter of the Association of Rural Banks (ARB) has passionately appealed to its umbrella organization, the ARB APEX Bank to review its policy of withholding five percent of its deposits of rural and community banks for their operations with urgency.
Togbui Binah Lawluvi VI, Chairman of the Volta Region Chapter of ARB disclosing this to the Ghana News Agency at a forum hosted by Asubonten Rural Bank, said the abolishing of the five percent was necessary as APEX Bank is now strong, self-financing and economically deemed fit to stand on its own.
He said the legislative framework which established the APEX Bank at its inception mandated Rural and Community Banks (RCBs) to deposit that quantum of money targeted at serving as seed money and source of capital inflows for its operations.
Togbui Lawluvi said the policy was becoming an albatross hanging on the efficiency of the operations of RCBs and should be disengaged.
Nana Owusu-Afari, Director of Asunbonten Rural Bank and convener of a three-member Committee, charged to investigate the matter said total deposits of RCBs over the last five quarters ending March 31, this year, averagely totalled GHC 1.095 Billion with the mandated five percent constituting GHC 54.8 million, which is lodged with APEX Bank.
He said by this analysis have resulted in the loss of income of about GHC 11.5 million, if these funds were invested in Treasury bill at the rate of 21 percent.
Nana Owusu-Afari, also President of the Association of Ghana Industries (AGI) said the RCBs paid GHC 4.4 million in interest cost to mobilise these funds excluding personnel and other operational costs.
He said their findings recommended the abolition of the policy and funds reploughed towards RCBs investment portfolios.
“It will be prudent if APEX Bank pays interest on these special deposits at Treasury bill rate less than 300 basis points.”
Nana Owusu-Afari suggested at the behest of RCBs, funds be used to purchase any of the Apex Certificate of Deposit (ACOD) products, which is an investment product designed for short-term investment need of rural and community banks.
Source: GNA