Community banks seek faster BoG approvals to drive financial inclusion

By Kizito CUDJOE

A community banking expert has urged the Bank of Ghana (BoG) to accelerate approvals for newly elected directors and branch openings, warning that regulatory delays could slow expansion plans and undermine efforts to deepen financial inclusion across the country.

The call comes at a time when community banks, traditionally known as rural banks, are emerging as one of the fastest-growing and most resilient segments of Ghana’s banking industry, supported by stronger regulation, improved governance and rising public confidence.

Industry players say lengthy clearance processes for directors, branch permits and operational approvals can leave banks unable to fully constitute their boards, delay expansion into underserved communities and increase operational costs associated with branch projects, even as tighter oversight by the central bank continues to strengthen stability and confidence within the sector.

The Executive Director of Proven Trusted Solutions, Joseph Akossey, said BoG deserves credit for the significant strides made in strengthening governance and regulatory supervision within the community banking space.

“BoG is doing extremely well in its regulatory oversight of community banks. This has fostered stability in the sector and strengthened the confidence level of the banking public,” he said.

According to him, the community banking sector has increasingly become a critical pillar of the country’s banking industry and financial inclusion agenda, with upcoming reforms in the microfinance sector expected to further improve capitalisation and resilience.

“The Microfinance sector reform to be implemented will go a long way to make the sector well-capitalised and robust to deepen financial inclusion and drive economic growth and development,” he added.

It is against this backdrop that Mr. Akossey believes the central bank should fast-track the regulatory clearance process for newly elected directors of community banks.

He described the ‘Fit and Proper framework’ as an important safeguard that helps ensure only qualified and competent individuals are appointed to oversee community banks and protect depositors’ funds.

“It is commendable that BoG undertakes extensive due diligence to ensure that directors meet the Fit and Proper requirements. This goes a long way to ensure that the right people are appointed to provide oversight and meet the expectations of shareholders and other stakeholders,” he said.

However, he noted that there remains room to improve turnaround times for approvals without compromising the integrity of the screening process.

“There are instances where approval of newly elected directors is delayed, and this can have negative implications for banks,” he said.

Mr. Akossey was quick to point out that BoG cannot always be blamed for such delays because the approval process involves collaboration with third-party institutions responsible for background and compliance checks.

These include the Financial Intelligence Centre (FIC), which conducts anti-money laundering checks, and the Criminal Investigation Department (CID), which carries out background verification.

“Delays can occur at any point along the chain. For this reason, these institutions must also fast-track their work to enable BoG to meet its approval timelines,” he stated.

He added that some delays are also self-inflicted, particularly where community banks fail to complete and submit the required documentation promptly after annual general meetings (AGMs).

He said banks must ensure that personality note forms and supporting documents, such as tax clearance certificates for newly elected directors, are submitted without delay to facilitate regulatory processing.

“This will enable the regulator and its partner institutions to play their part in avoiding unnecessary delays. The leadership of community banks should bear in mind that if they delay the process, the entire approval chain is affected because of the rigorous Fit and Proper screening mechanism,” he said.

Touching on branch expansion, Mr. Akossey argued that delays in securing permits, inspections and approvals for new branches could ultimately slow efforts to expand financial services to unserved and underserved communities.

He noted that prolonged approval periods can also disrupt rental arrangements and affect operational planning for banks preparing to commence business in new locations.

“BoG is, therefore, encouraged to fast-track this process to prevent some banks from bypassing due process in opening new branches,” he said.

Mr. Akossey further advocated reforms that would allow well-capitalised and efficiently managed community banks to expand beyond their traditional operating territories if they satisfy prudential requirements.

“Some community banks are currently performing strongly in terms of profitability, asset growth and operational efficiency. Such institutions should not be denied the opportunity to expand their footprint if they meet the required standards,” he said.

He argued that allowing successful community banks to extend their operations into other regions would deepen financial inclusion in both rural and urban areas while supporting economic growth and development.

Drawing comparisons with international practice, he noted that community banks in the United States are permitted to expand into other states provided they continue to satisfy prudential and regulatory requirements.

“That model has contributed significantly to the growth and sustainability of community banking and offers useful lessons for Ghana as the sector continues to evolve,” he said.

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