RCBs urged to back community bank transition with real reforms

By Kizito CUDJOE

Rural and community banks (RCBs) have been cautioned to back their transition into community banks with tangible operational reforms, as the Bank of Ghana’s (BoG) microfinance directive sets a December 31 deadline for full compliance.

While the shift is widely welcomed for shedding the long-criticised “rural” label, industry observers say the real test lies beyond rebranding.

The reform is expected to push banks to deepen lending to small businesses, drive local economic development and improve service delivery, moving away from a long-standing reliance on government securities toward more impactful, community-centred banking.

Originally scheduled for March 31, the deadline for the transition has been extended to December 31, according to sources within the rural banking industry.

Rural banking expert and Executive Director of Proven Trusted Solutions, Mr. Joseph Akossey, said the reform is a welcome development, noting that industry players have long advocated the removal of the “rural” tag.

“They are of the view that the rural label has an adverse effect on brand equity, identity and overall appeal,” he said.

Against this backdrop, he urged RCBs to ensure their operations reflect the new status.

“The change of name from rural bank to community bank is a change of status. There must be a new way of doing things that meets or exceeds customer expectations. To be truly a community bank, they must demonstrate certain characteristics,” he stated.

He stressed the need for banks to scale up lending to support local businesses, describing it as critical given that deposits are mobilised from the communities in which they operate.

“The traditional business model, where a significant portion of deposits is invested in government securities, should be reviewed,” he said.

Citing international experience, he noted that in the United States, community banks account for about 60 percent of small business lending and roughly 80 percent of agricultural financing.

“We expect the new community banks to replicate this by deepening support for local businesses. This will foster growth and employment creation. Some rural banks are already doing well in this regard,” he added.

He cited Amenfiman Rural Bank, now operating as a community bank, as an example of an institution supporting local enterprises, with its loan portfolio reaching about GH¢1 billion as of December 2025. Nyakrom Community Bank PLC, he noted, is doing fantastic by prioritising lending support for businesses. Its loan to deposit ratio is over 60 percent.

Mr. Akossey, who was speaking in an interview with B&FT, further indicated that community banks must play a more deliberate developmental role by identifying viable business opportunities within their catchment areas and supporting capable entrepreneurs to execute them.

“They can scan their communities for viable projects, identify astute entrepreneurs and provide the needed financing. In doing so, they serve as financiers while helping to unlock local economic potential,” he explained.

Such an approach, he said, would create employment for the teeming youth and contribute to broader economic prosperity, while offering a viable alternative to investments in government instruments, which have become less attractive.

“Community banks must go beyond mobilising deposits, investing in treasury bills and declaring profits. They should serve as catalysts for development in the communities in which they operate,” he said.

He pointed to Kwaebibirem Community Bank as one institution making strides in this area, noting that its leadership supported a local entrepreneur to acquire modern machinery and a tipper truck for a block manufacturing business, creating jobs in the process.

On corporate social responsibility (CSR), Mr. Akossey said community banks must scale up investments in education, health and other social initiatives, especially as the new model expands community ownership.

Under the framework, communities are expected to hold up to 30 percent equity in the banks, making them key stakeholders.

“Success in banking goes beyond profit. When banks reinvest part of their earnings into community development, it builds loyalty and can translate into increased deposits,” he said, referencing broader environmental, social and governance (ESG) expectations.

He also called for a shift toward relationship banking, emphasising the need to build and sustain long-term ties with customers rather than focusing solely on transactions.

“Banking today is about relationships. Community banks must deepen engagement with their customers,” he noted.

Improving service quality, he added, will be essential if customers are to perceive real change following the transition.

“There must be a noticeable improvement in service delivery. Staff need training to appreciate the higher standards required under the community banking model,” he said.

On operations, he urged banks to prioritise digital transformation and reconsider legacy systems such as passbooks, which have largely been phased out in the universal banking space.

“RCBs must reprofile their customers and adopt hybrid service models that combine digital solutions with personalised service,” he said.

He further stressed the need for a shift in staff attitudes and professional standards to align with the new model.

“Staff must adhere to high ethical and professional standards to enhance both their own reputation and that of their institutions,” he added.

He also urged sector leaders to adopt effective brand communication strategies to reposition community banks and make them more attractive to younger customers and professionals.

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