Dr Daniel Osabutey, a Senior Lecturer at the Accra Technical University, has commended the Bank of Ghana for its directive requiring all rural banks to convert into banks by March 31, 2026.
Dr Osabutey described the reform as timely and necessary, noting that it addressed long-standing structural weaknesses in the sector while promoting financial stability, improving financial inclusion, and restoring confidence in the country’s microfinance industry.
He explained that the directive introduced stronger regulatory standards that were expected to improve governance across institutions.
According to him, higher minimum capital requirements, clearer ownership structures, and enhanced supervision would help reduce systemic risks and protect depositors.
Dr Osabutey said the measures would also help address persistent problems of undercapitalisation that had affected many rural banks for years.
He added that the reform provided structured options for struggling institutions, including mergers, acquisitions, and supervised asset transfers.
The senior lecturer further stated that the transition to community banks would expand financial inclusion by creating a more unified banking model that served both rural and urban populations.
He said the approach would improve the mobilisation of local savings and increase access to credit for micro, small, and medium enterprises, thereby supporting economic activity at the grassroots level.
He also highlighted the requirement for a minimum of 30 percent community ownership as particularly significant, saying it would strengthen accountability and rebuild trust between financial institutions and the communities they serve.
Dr Osabutey noted that the reform assigned a more prominent role to ARB Apex Bank Limited, which would act as a shared services provider for the sector.
He explained that this would help reduce operational costs through centralised systems such as liquidity support, digital platforms, and payment infrastructure.
He said the development would also accelerate digital transformation and improve the competitiveness of smaller financial institutions, adding that streamlining the sector would enhance the effectiveness of monetary policy and financial inclusion programmes at the national level.
However, Dr Osabutey cautioned that the transition could present challenges, including difficulties in raising capital, restructuring ownership, and managing institutional mergers.
He warned that without effective communication, customers could experience temporary service disruptions during the transition period.
He therefore emphasised the need for a phased and well-coordinated implementation process and called for strong regulatory guidance from the Bank of Ghana, capacity-building support from ARB Apex Bank Limited, access to transitional financing, and transparent engagement with customers.
