The Association of Rural Banks is calling on the government to address the issue of locked-up funds, which has been affecting the operations of rural banks across the country.
Michael Aidoo, CEO of Sekyere Rural Bank PLC, stated that rural banks are facing significant challenges, including the financial cleanup exercise initiated by the former Nana Addo government, which resulted in substantial funds being locked up in regulated institutions.
Speaking at a meeting of the Association of Rural and Community Banks in Pekyi, Kumasi, Mr Michael Aidoo emphasized that the locked-up funds are hindering the ability of rural banks to operate effectively.
He appealed to the government to release these funds, particularly those locked up with surge-regulated institutions, to enable rural banks to access their money and continue serving their customers.
The issue of locked-up funds is not new, and rural banks have been advocating for its resolution.
The National Association of Rural Banks has been pushing for the government to prioritize the inclusion of rural banks in repayment agreements, ensuring they receive their fair share of the locked-up capital.
The association estimates that approximately GH¢500 million is owed to rural banks, which is affecting their Capital Adequacy Ratio (CAR) and profitability.
In addition to the locked-up funds, rural banks are also grappling with non-performing loans, a challenge faced by the banking sector as a whole.
Mr Aidoo noted that businesses are struggling, making it difficult for them to repay loans, which is further exacerbating the problem.
The government has made some efforts to address the issue, including the recent disbursement of GH¢1.5 billion to affected investors of failed fund management companies.
However, rural banks are urging the government to prioritize their claims and provide concessional facilities to support their operations.
The Association of Rural Banks is hopeful that the government will take concrete steps to resolve the issue of locked-up funds, enabling rural banks to continue providing essential financial services to their communities.
