NAFANA RURAL BANK UNABLE TO RAISE STATED CAPITAL (PAGE 29, APRIL 17, 2010)

THE Nafana Rural Bank Limited in the Jaman North District of the Brong Ahafo Region is grappling with the challenge of raising GH¢150,000, which is the capital requirement set out by the Central Bank for all rural banks in the country.
As of last year, the bank’s stated capital stood at GH¢34,228, which falls short of the Bank of Ghana’s (BoG) requirement by about GH¢116,000. In 2008, the stated capital of the bank was GH¢ 31,236, while in 2007, it was GH¢ 29,817.
Out of the 19 rural banks in the Brong Ahafo Region, Nafana placed 18th in the league of rural bank mobilisation, according to the Efficient Monitoring Unit (EMU) report of the Apex Bank.
The Vice Chairman of the Board of Directors of the bank, Mr Pascal Essieh, at the Seventh Annual General Meeting of shareholders of the bank at Sampa said that the board had negotiated with other banks for the possibility of a merger but ‘‘Our attempt with Suma Rural Bank was a non- starter. The only alternative now is for the bank to raise the remaining capital’’.
The Vice chairman emphasised that several consultations had been made but it still seemed difficult for the shareholders and prospective ones to buy more shares in the bank, adding ‘‘I must say we are in a crises period with regard to the share mobilisation. We need to take a decisive action’’.
Mr Essieh again disclosed that the operations of the bank in 2008 led to a net loss of GH¢32,152, after considering all expenses and depreciation, admitting that 2008 was one of the difficult years for the bank, and that the loss came as a result of high operation cost and a huge provision against doubtful loans and advances.
He however, indicated the bank made a modest profit of GH¢20,258 in 2009, while its total assets grew by 7.4 per cent from GH¢746,714 in 2007 to GH¢ 802,075 in 2008 and further increased to GH¢1,166,562 in 2009, representing 45 per cent.
The Vice chairman pointed out that as part of the penalties for the non-attainment of the GH¢150,000 share capital requirement of the BoG, the bank would not be allowed to pay dividend to its shareholders, explaining that the board would recommend that part of the accumulated reserves be transferred to the stated capital.
The Vice-President of the Brong Ahafo Regional Chapter of the Association of Rural Banks, Mr Kofi Bonsu Boakye- Boateng, stated that rural banks that could not raise the stated capital of GH¢150, 000 could arrange to merge with other rural banks.