The Bank of Ghana has reiterated its commitment to continue to pursue policies and programmes aimed at improving the operational banking environment, to build customer confidence and ensure the stability and soundness of the financial sector.

According to the Governor, Dr. Ernest Addison, developing a vibrant financial sector that is capable of harnessing financial resources available for growth and development requires the commitment of all key stakeholders.

Speaking at the 40^th Anniversary Celebration of Akuapem Rural Bank, Dr. Addison said the Bank of Ghana has made several improvements to the surveillance and supervision regime, with a positive impact on the rural banking sector’s performance.

These, he said, were propelled by deploying several tools available to the Bank of Ghana including regular on-site examinations, improved quarterly performance reviews, management visits, follow-ups and improvement in the approvals and authorisation regime, among others.

Another major initiative introduced is the Online Regulatory Analytics Surveillance Systems (ORASS), he said.

“This was introduced to help streamline data collection, maintain dynamic corporate profiles on regulated financial institutions, and move licensing and related authorisation onto an electronic platform without the need to physically visit the premises, thereby easing the supervisory and regulatory burden on financial institutions. An important requirement for successful integration with ORASS, especially in the submitting of prudential returns, is the requirement to use application programming interface (API) to perform machine-to-machine data transfer.”

To this end, he said reporting institutions must reconfigure their banking software and databases to capture new data points and implement API processes for direct data transfer from banking software to the ORASS, adding, the main goal of introducing the API is to reduce, as far as possible, human interference in data processing and transfer, which is best done by automated computer processes.

Meanwhile, the ARB Apex Bank is implementing the API submission of returns for rural and community banks operating on the T24 platform.

The Governor said a technical team from the Bank of Ghana continues to provide the needed support to facilitate this process.

Implementation of e-Cedi

The Governor also used the opportunity to reiterate the Central Bank’s commitment to innovation and technology.

In May 2020, the regulator established the Fintech and Innovation Office to drive the cash-lite, epayments and digitisation agenda with the mandate to develop policies to promote Fintech, Innovation and Interoperability in the country. Subsequently, the Bank, in February 2021, launched a regulatory and innovation sandbox pilot to provide a framework for stakeholders and other innovators to conduct live experiments in a controlled environment under the supervision of Bank of Ghana.

Dr. Addison said Central banks around the globe are exploring the introduction of digital currencies and Ghana is among the leading African countries to enter the pilot phase, adding, “the E-Cedi, which is the first general-purpose Central Bank Digital Currency in Africa, will complement and serve as a digital alternative to physical cash, in line with the Government’s ‘Digital Ghana Agenda’.”

“The E-Cedi will be tested in trial phases with banks, payment providers, merchants, consumers and other stakeholders for a nationwide rollout as it will present an opportunity to build a robust, inclusive, competitive and sustainable financial sector. We expect that all rural and community banks will collaborate with ARB Apex Bank to leverage the opportunities available with digitisation within the payment ecosystem”, he pointed out.

Regulatory and operational prospects of rural banks

The Governor said a lot of progress has been made within the sector as the Central Bank seeks to improve regulatory and operational prospects of rural banks.

From 30 rural banks in the 1980’s, he said there are now 145 of such institutions with a branch network of about 851.

The increased number of rural banks has been accompanied by increased customer reach, technology deployment, as well as improved delivery of financial services within the local communities.

As of the end of June 30, 2021, the overall profitability of rural banking sector was positive, and the sector recorded an annual growth of 27.4% in total assets, which amounted to ¢6.5 billion. Advances, deposits and investments also increased by 23.6%, 31.2% and 50.1%, respectively.