Bosomtwe Rural Bank has signed onto the Ghana Deposit Protection Scheme to protect depositors’ funds in the event of a challenge.

Vice-Chairman of the Bank’s board, Benjamin Osei-Boateng, said both the interest of depositors and their funds have become paramount in the bank’s operations, hence the decision to secure them.

The Ghana Deposit Protection Scheme was established under the Ghana Deposit Protection Act, Act 968 of 2018 protects small depositors from losses caused by an insured event.

Mr Osei-Boateng said the banking sector crisis and the subsequent clean-up made the move necessary.

He believes the Deposit Protection Scheme will significantly boost public confidence in the financial system.

“The decision to establish the Deposit Protection Scheme will go a long way to boost public confidence,” he said.

Mr Osei-Boateng spoke to Luv Biz during Bosomtwe Rural Bank’s 29th Annual General Meeting at Kuntenase in Ashanti Region.

Deposit portfolio increased by 18.53 per cent, from GH¢53,792,862 in 2017 to GH¢ 63,761,290 in 2018.

“We are determined to continue to formulate strategic policies and plans which will improve upon our deposit base whilst mitigating any corresponding risks,” he added.

Investments

Investment increased by 22.42 per cent from GH¢30,815,238 in 2017 to GH¢37,723,303 in 2018.

The investment component represents the Bank’s placements with other Investment Houses, Discount Houses and Government Treasury bills.

Mr Osei-Boateng said the bank has increased authorised shares to boost its capital for expansion.

Share Capital

The bank’s paid up capital was GH¢3,632,050 as at December 31, 2018, and has further increased to about GH¢3,800,000 as at the close of business July 31, 2019, the highest in the region.

The amount far exceeds the Bank of Ghana's minimum threshold is about 280 per cent more than the minimum one million ghana cedis required by all rural banks to be achieved by February 2020                                               

New share purchases solely accounted for this significant increase of GH1, 579,687.

Loans and Advances

During the year under review, the Bank’s Loans and Advances Portfolio also increased by 29.00% from GH¢17,928,283 in 2017 to GH¢23,127,529 in 2018.

This is attributable to speedy processing and disbursement of term loans which have in the past contributed significantly to our loan growth.

The Bank was also able to review some of its lending rates on traditional loan products to make them cheaper and attractive to the delight of our customers.

Dividend

Management says over the last few years, it has taken strong measures to ‘Secure the Foundations’ of Bosomtwe Rural Bank and the Board is confident that its strategy, and the actions taken so far, have positioned the Bank for sustainable future growth.

Consequential to these strategies and what is termed as “solid” financial performance, the Board says it took prudent decisions on the issue of payment of dividends over the years.

However, there were some factors encountered in 2018 that have caused the Board to review the payment of dividends.

“The Board recognizes the importance of dividends payouts to our shareholders… We regret to inform you that the Board is unable to recommend payment of dividends as it has become duty-bound to uphold prudential guidelines from the Regulator, implementation of International Financial Reporting Standards (IFRS) coupled with the financial sector meltdown and the need to build the Bank’s liquidity buffers,” Board chairman, Philip Edward Kwabena Antwi (Esq).

Meanwhile, the Association of Rural Banks implores banking officials to strengthen anti-cyber security mechanisms to protect depositors.

The president, Daniel Kwame Owusu, charged the RCBs to adopt the cyber-security guidelines introduced by the Bank of Ghana to safeguard reliable and secure deposits.

“Effective operations of the banks require the use of capital funds to support the acquisition of tried and tested security software and equipment.”