Rural and community banks have been urged to ensure effective supervision of agencies, address poor credit management processes, high levels of outstanding reconciliation and huge investment in property, plant and equipment.
Mr Seth Ankrah, Kumasi Branch Manager of the Association of Rural Banks (ARB) Apex Bank, who gave this advice, said the adoption of sound banking practices would help address these issues and move the rural banking concept close to realization.
He was speaking on behalf of the Managing Director of the Apex Bank at the 17th Annual General Meeting (AGM) of shareholders of the Bosomtwe Rural Bank at Kuntanase on Tuesday.
He noted that the banking industry was gradually becoming very active with the influx of banks from other West African countries and the need for an aggressive and flexible approach to banking had become paramount in order to increase the profit levels and add value to the shareholder fund.
Mr Ankrah said the concept of Zero Account Opening balance should be embraced by all rural and community banks to bring banking services to the doorsteps of all the rural folks within their catchment areas.
The Branch Manager announced that the ARB Bank had signed agreements with foreign remittance companies including Western Union, Vigo, Placid and some of the local commercial banks to help diversify the source of revenue generation for the rural banks and expressed the hope that the banks would help market these products.
Mr Simon Osei-Mensah, Chairman of the Board of Directors of the Bosomtwe Rural Bank, said the bank's profit before tax decreased from 3.1 billion cedis in 2005 to 2.8 billion cedis in 2006.
He attributed this to the declining interest rates and increased costs due to surges in petroleum prices and the power shedding exercise, which resulted in frequent use of electric generators and other factors.
Notwithstanding this decline in profitability, the balance sheet showed improved performance with the bank's total assets growing by 34.4 per cent from 46 billion cedis to 61.9 billion cedis.
Total deposits, he said, rose from 35.2 billion cedis in 2005 to 48.7 billion cedis in the year under review showing an increase of 38.30 per cent, while the net worth of the bank also increased from seven billion cedis in 2005, to nine billion cedis in 2006, resulting in a relative increase of 28 per cent.
Mr Osei-Mensah stressed that investments of the bank also rose from 23.1 billion cedis to 24.4 billion cedis during the year, which showed an increase of 5.83 per cent, adding that the total advances portfolio was 23.2 billion cedis, an increase of 76.2 per cent over the 2005 position of 13.2 billion cedis.
Touching on the Akuafo Cheque purchases, the Chairman said total purchases for 2006 was 7,809 million cedis, while total amount of 161.4 million cedis was spent on its commitment to social responsibilities in the bank's areas of operation.
Barima Offe Kwasi Okogyeasuo, paramount chief of Kokofu Traditional Area, who presided, urged the shareholders to increase their shares and work hard with the directors to develop and sustain the bank.