The total deposits mobilized by Rural and Community Banks (RCBs) shoots up from GH¢ 3,549.7 million at end of the second quarter last year to GH¢ 4,337.5 million around the equivalent quarter in 2020, as captured in the quarterly bulletin released by the Bank of Ghana on Monday, October 19, 2020.
This indicates a year-on-year upsurge of approximately 22.2 percent.
“Provisional data indicate that deposit mobilisation by the RCBs improved further in the second quarter of 2020 compared with the second quarter of 2019”, the Bank of Ghana opined.
Rural and Community Banks logged a 6.4 percent increase in their total deposits mobilized quarter-on-quarter, rising from GH¢ 4,075 million in the first quarter of 2020 to GH¢4,337.5 million in the second quarter of the same year, the Bank of Ghana added.
The Bank of Ghana intimated that “the level of RCBs deposits at the end of the review quarter constituted 5.0 percent of total deposits of the banking system, compared with the share of 5.1 percent in the previous quarter and 4.8 percent at the end of the second quarter of 2019”.
Based on the quarterly bulletin, apart from the deposits mobilized there were additional liabilities incurred by the Rural and Community Banks, which also recorded an upsurge. Year-on-year other liabilities increased from GH¢ 312.9 million at the end of 2019 quarter two to GH¢ 381.1 million of the equivalent quarter in 2020, representing a 21.8 percent increase yearly.
Similarly, a quarter-on-quarter analysis of the other obligations borne by the Rural and Community Banks also shows a 10.1 percent increase, hovering around GH¢ 346.2 million at end of the first quarter of 2020 and then rising to settle at GH¢ 381.1 million by the end of 2020 quarter two.
The Bank of Ghana, however, cautioned that shareholders’ funds keep decreasing. Shareholders’ funds declined to GH¢ 410.6 million by the end of the second quarter of 2020 as against a total of GH¢ 465.1 million recorded the previous year around the same quarter, indicating a decrease of about 11.7 percent in the capital of Rural and Community Banks.
More so, this is also reflected on a quarter-on-quarter basis, with Shareholders’ funds dropping from GH¢ 444.5 million at the end of 2020 quarter one to settle at GH¢ 410.6 million by the ending of the second quarter of the year under review. This implies that Shareholders’ funds waned by 7.6 percent quarterly.
The decline in shareholders’ funds could be attributed to many reasons but not limited to the following: accumulated losses overtime, large dividend payments and excessive debts incurred, just to mention a few.
In conclusion, even though deposit mobilization by Rural and Community Banks have improved in the second quarter, there is more room for growth to enable them assist with the government’s initiative of increasing financial inclusion by 27 percent because they still contribute to only 5 percent of total deposits in the banking system.
“Under the National Financial Sector Development and Inclusion Strategy (2018-2023), Government expects an increase in access to finance from the current rate of 58 percent to 85 percent by 2023”.
