RCBs yet to fully comply with Corporate Governance Directive from BoG
Several Rural and Community Banks (RCBs) in the country are yet to fully comply with the Corporate Governance Directive issued by the Bank of Ghana (BoG) in 2021.
This is despite frantic efforts made by the Central Bank to make all RCBs comply with the directive.
Making the disclosure at the 21st Annual National RCBs CEO’s Conference on Friday, October 14, 2022, Deputy Governor of the BoG, Elsie Addo Awadzi, quipped that, due to RCBs not fully complying with the directive, the Central Bank continues to receive many petitions from whistle-blowers on serious acts of impropriety involving directors and senior management of RCBs.
Something, the Second Deputy Governor described as worrying.
“The Bank of Ghana finds it worrying that it continues to receive many petitions from whistle-blowers alleging serious acts of impropriety involving directors and senior management of RCBs. We expect that these would be a thing of the past as RCB fully comply with the Corporate Governance Directive,” she remarked.
Partial compliance to the directive, the Second Deputy Governor further noted, contributed to the sector recording the highest employee involvement (46%) in fraud cases in the banking industry as stated in the Bank of Ghana’s 2021 Fraud Report.
“Staff members are expected to ensure high levels of utmost good faith in the discharge of their duties. The Bank of Ghana’s 2021 Fraud Report for the banking sector revealed that the RCB sector recorded the highest level of employee involvement (46.04%) in fraud cases, due to poor internal controls among other things. Staff found culpable are blacklisted by the Bank of Ghana from working in the banking Industry. We expect that RCBs will continue to strengthen their internal controls and promote high standards of legal and ethical behaviour by staff,” she noted.
The directive by the BoG seeks to promote higher standards of corporate governance and risk management to help strengthen the safety, soundness, and resilience of RCBs and ultimately the safety of their depositors’ funds and our financial system.
Speaking further at the Conference themed “Positioning Rural Banking at the Centre of Financial Services Delivery in Ghana – The Role of Stakeholders” Mrs Addo Awadzi averred RCBs must also adopt sustainable banking principles.
According to the Second Deputy Governor, RCBs must use their lending powers to promote cleaner and more environmentally sustainable ways of doing business in their various communities.
RCBs must also promote social inclusion through lending to women, youth and other marginalized groups.
“RCBs must also reflect ESG principles in their internal policies to reduce their own carbon footprint, and to promote more gender diversity in their leadership,” she added.
In November 2019, the Bank of Ghana launched Ghana’s Sustainable Banking Principles, in collaboration with the Ghana Association of Bankers and the Environmental Protection Agency after years of research, study tours, and technical work with the support of the International Finance Cooperation. Universal banks are already implementing these principles that require them to manage Environmental, Social, and Governance (ESG) risks in their operations.
