Rural Bank Chief Executives Officers (CEOs) Association has signalled its readiness to go to court over a controversial provision in the Corporate Governance Directive (CGD) for Rural and Community Banks (RCBs).
The President of the Association, who is also the CEO of BESSFA Rural Bank in Garu, in the Garu District of Upper East Region, Alhaji Hayatudeen Awudu Ibrahim, described the directive as unfair. Speaking at the 24th Annual CEOs Conference, Alhaji Ibrahim argued that paragraph 78 of the Directive was unconstitutional and detrimental to the rural banking sector.
According to him, Paragraph 78 of the CGD, which came into effect on April 1, 2022, mandates that CEOs who have served eight years or more with their banks before the implementation date may only serve one additional four-year term.
Alhaji Ibrahim averred that this provision is retroactive and violates Article 107(b) of the 1992 Constitution, which prohibits retrospective legislation that adversely affects rights.
According to him, in spite of three and a half years of engagement with the regulator, the Association’s calls for amendment of the provision have not yielded results.
Alhaji Ibrahim expressed disappointment that the BoG’s “Reset agenda,” introduced under the current government, has not addressed the concerns surrounding paragraph 78.
He stressed that a letter from the Head of the Other Financial Institutions Supervision Department (OFISD) of Bank of Ghana in May confirmed that the provision would remain unchanged.
The Association fears that if the directive is enforced as it stands, nearly all long-serving CEOs will be forced into retirement within six months.
Alhaji Ibrahim lamented that this year’s conference may be the last for many seasoned leaders who have contributed significantly to the growth and stability of the rural banking industry.
He warned that the consequences of enforcing the provision would be severe, including loss of institutional memory, disruption of strategic leadership, and weakened competitiveness of RCBs.
“The adverse consequences far outweigh any perceived benefits,” he stated, urging the BoG to reconsider its stance.
To protect the rights of its members and ensure fairness, the Association is prepared to explore all lawful avenues, including seeking judicial interpretation.
Alhaji Ibrahim emphasised that legal recourse may be necessary to uphold constitutional principles and preserve the integrity of the rural banking system.
While expressing hope that the Deputy Governor and BoG leadership will adopt a more inclusive and prudent approach, Mr. Ibrahim reaffirmed the Rural Bank Association’s commitment to high standards of governance, risk management, and innovation.
He called for unity among CEOs to confront the challenges ahead and leverage digital platforms to drive national development.
To get the Bank of Ghana to respond to the concerns raised by the Rural Bank CEOs Association, Kingston Ocloo of OFSID at the Bank of Ghana (BoG), who was present at the conference, refrained from making any definitive comment on the validity or implications of paragraph 78 of the Corporate Governance Directive as put forward by the CEOs’ leader.
While acknowledging the gravity of the issues presented by the Association’s President, Mr Ocloo assured CEOs of rural banks that the matter would be taken to the appropriate authorities at the Bank of Ghana for further consideration.
The BoG official emphasised the institution’s commitment to engaging stakeholders constructively and pledged to communicate any developments and outcomes to the rural banks’ Association in due course.
With this looming legal battle between the CEOs of rural and community banks and the their regulator, the Bank of Ghana, the Paramount Chief of Esikado – Ketan and the Western Regional House of Chiefs Nana Kobina Nketsia V who was the chairman of the 24th Annual CEOs conference has emphasized that if the rules do not favour the rural banks they must come together as a collective body and fight it.
The conference, attended by distinguished guests and industry leaders, concluded with a renewed sense of purpose among rural bank executives, determined to safeguard their institutions and advocate for policy reforms that reflect the realities of the sector.
