The Association of Rural Banks Ghana (RCBs) has renewed calls for the government to reconsider a reduction in the corporate tax rate for rural and community banks.
Commenting after climax of the 8th Rural Banking Week Celebration, the Executive Director of the association, Mrs Comfort Owusu, stated that the hike in the corporate tax is suffocating the rural banks and subsequently hampering the bank’s development role in the provision of basic infrastructure, financial and material support to individuals and institutions.
The Executive Director Disclosed that until the passage of the new Income Tax Act 2015, (Act 896) in 2015, rural and community banks were paying eight per cent tax on their annual income, however the passage of the new law saw it increased to 25 percent, a situation she bemoaned.
She therefore, charged the government to reconsider a downward revision of the corporate tax rate for the RCBs to enable them to live up to their development responsibilities.
“If government wants rural and community banks to play the role they were set up to play, then government must reverse it to the eight per cent or at most peg it at 15 per cent. This must be done as soon as possible because it is really suffocating us”.Mrs Comfort Owusu
RCBs Spent More Money on Operational Costs
Mrs Comfort Owusu pointed out that RCBs spent so much money to operate in their catchment areas. She noted those are places that universal banks do not want to go and even if they do, they are only interested in doing business with a certain calibre of customers.
Mrs Owusu averred that RCBs went through very difficult mean, adding that it was more expensive to bring in the unbanked as well as petty traders, and the poor farmers into their banking operations. So, the government should consider these issues and reduce the tax as an incentive to them.
Mrs Owusu mentioned that these developments were compelling most of them to withdraw their community support and increasing their interest rate just to meet their operational cost and be able to pay good dividend to shareholders.
Appeal to lift non-dividend payment directive
Addressing participants in the climax of the week-long celebration, the President of the Association of Rural Banks, Mr Kwame Owusu Sekyere, made an appeal to the Bank of Ghana (BoG) to reverse the non-payment of dividend directive.
He noted that directive by the Central Bank has stalled the increase in the stated capital of some of the RCBs.
The National President thus, made an appeal to the government through the Bank of Ghana to intervene to retrieve locked-up funds of some RCBs with some defunct investment companies, especially with National Trust Holdings Company Limited (NTHC) which is adversely affecting their operational viability and could easily lead to liquidity crunch.
The Head of Other Financial Institutions Supervision Department of the BoG, Mr Yaw Sapong, who delivered the keynote address on behalf of the Governor, said the country’s banking sector made a strong showing in spite of the threats posed by the COVID-19 pandemic.