The Specialized Deposit-Taking Institutions (SDIs) in Ghana, which include savings and loans companies, microfinance institutions, rural and community banks (RCBs), finance houses, and credit unions, have long played a vital role in promoting financial inclusion.
These institutions, regulated by the Banks and Specialized Deposit-Taking Institutions Act, 2016 (Act 930) under the Bank of Ghana, primarily serve underserved populations such as rural communities, small businesses, and low-income individuals who may lack access to traditional banking services.
A key part of the SDI sector, the Rural and Community Banking (RCB) sub-sector, focuses on providing essential financial services to rural populations. RCBs mobilize savings, extend credit to local businesses and farmers, and promote economic development.
They also offer financial literacy programs and savings products that are critical to small-scale enterprises and agricultural activities, which remain the backbone of rural economies.
However, despite these efforts, the RCB sub-sector has faced significant challenges. While the SDIs experienced an 87% decrease in the number of fraud cases in 2023, down from 1,835 cases in 2022 to 241 cases, the total financial loss from fraud rose sharply by 98%, from GH¢4.4 million in 2022 to GH¢8.7 million in 2023.
Most of these cases originated from the RCB sub-sector, highlighting its continued vulnerability despite fewer incidents.
The major types of fraud reported in the SDI sector included cash theft, fraudulent withdrawals, and forgery and manipulation of documents.
Notably, cash suppression, historically a major area of concern, saw a 90% reduction in cases, from 1,597 in 2022 to 156 in 2023. However, fraudulent withdrawals from customers’ accounts resulted in the highest losses, totaling GH¢4.6 million, a sharp rise from GH¢0.17 million in the previous year.
Though cash theft (cash suppression) cases decreased by 32%, the financial losses still amounted to GH¢1.9 million in 2023, down from GH¢2.8 million in 2022. Furthermore, e-money fraud emerged as a growing concern, with losses surging to GH¢1.4 million in 2023, compared to GH¢800 in 2022, pointing to the rising risks associated with digital payment systems.
The Bank of Ghana has been proactive in addressing these challenges, particularly focusing on mitigating cash suppression fraud. Extensive engagements with the Board of Directors and Management teams of Rural and Community Banks have led to efforts to strengthen internal controls and introduce stricter measures to reduce the occurrence of such fraud.
Despite the reduction in fraud cases, the sharp increase in total losses underscores the need for continued vigilance and improved security measures within the RCB sub-sector and the broader SDI landscape to safeguard the financial system and maintain public trust.
