The Bank of Ghana (BOG) has announced modalities to strengthen internal controls for Rural Banks to ensure prudent financial management practices.

Mr Amadu Montia, BOG Deputy Chief Manager, Banking Supervision Department, said the Central Bank had employed the services of experienced bankers to relieve rural bank managers who have not gone on leave for some years to enable them to enjoy their vacation.

He said the objective is to afford an independent check on the operational and internal control systems of rural banks but stated that this should not be misconstrued as witch-hunting but rather be regarded as a necessary internal control tool for improved performance.

Mr Montia, who was addressing the Ninth Annual General Meeting of Shareholders and Directors of Abokobi Rural Bank, near Accra, urged the Boards of Directors of rural banks to constantly monitor and improve internal controls to check fraudulent activities by officials.

He said statistics indicated growing public confidence in the Rural Banking system, which needs to be sustained through prudent managerial practices supported by effective and active Boards of Directors.

He said total deposits mobilised by all Rural/Community banks as at June 2001 amounted to 303.01 billion cedis, an increase of 121.87 billion or 66.73 per cent over the same period last year.

The Deputy Chief Manager said financial data of the Abokobi Rural Bank indicated that between December 31, 1999, and December, 2000, the bank's deposits increased from 868 million cedis to 1.631 billion cedis. Loans and advances also increased from 203 million cedis to 316 million cedis; investments from 690 million cedis to 1.600 billion while maintaining a positive capital adequacy ratio throughout the same period.

Mr Montia commended the directors, new management and staff for instituting measures that had turned over its fortunes and redeemed it from the past fraudulent activities by its former high-ranking officials, which almost collapsed its investments.

He advised the management to improve upon staff training to enhance operational efficiency and also to constantly consult the BOG before employing dismissed staff from other banks.

Mr Roland A. Boi-Doku, Chairman of the bank's Board of Directors, described the operations of the bank for the year under review as monumental with an astronomical increase of profits.

He said the bank's profit rose from 54.0 million cedis in 1999 to 192.95 million cedis in 2000, representing an increase of 257 per cent, adding that the bank has set aside 22.89 million cedis as dividends for shareholders, while 44.2 million cedis and 109.72 million cedis were transferred to the Statutory Reserve and Income Surplus Account respectively.

Mr Boi-Doku said investment in treasury Bills over 14 years was only 650 million but this rose by 600 million to 1.25 billion cedis in 2000.

The Board Chairman stated that the bank intends to establish a Susu system to help mobilise savings among small-scale customers and assist farmers with a loan of 30 million cedis with an interest rate of 20 per cent, which is below the normal lending rate.

Mr Sam Clegg, former Board member and Acting General Manager of the Ghana News Agency, who is also a Board Member of the bank, read the Directors' report.