Credit management among small scale businesses
CATHOLIC UNIVERSITY COLLEGE OF GHANA, FIAPRE
FACULTY OF ECONOMICS AND BUSINESS ADMINISTRATION
RESEARCH PROPOSAL
ASSESSMENT OF CREDITS MANAGEMENT AMONG RURAL BANKS IN THE SUNYANI MUNICIPALITY: THE CASE OF CAPITAL RURAL BANK
BY
George Wiafe
Tel. 0246086125
DECEMBER, 2012
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
The introduction of Rural and Community Banks (RCB) into the financial sector of Ghana dates back to the late 1970s. To set the background to this paper it must be noted that before the establishment of RCBs in the late 1970s and the subsequent expansion of other service providers into rural areas, access to institutional credit for farm and nonfarm activities was scarce. People in rural areas resorted all manner of sources or means for credit to assist them in their respective business (Nair & Fissha, 2010).
As it was noted in the study of Andah & Steel (2003) many small farmers and fishermen did not have deposit accounts in commercial banks, and the collateral they had available was not satisfactory for commercial lending which posed a great deal of challenge to them in securing credits. The rural folks who were mainly peasant farmers have to resort to diverse sources for credits. The main sources of credit were moneylenders and traders that charged very high interest rates. In many rural communities, secure, safe, and convenient savings and payment facilities hardly existed.
When there is the need for them the rural folks to conduct financial transactions, many rural dwellers had to travel long distances to receive payments (such as salary and pension deposits), transfer funds, and cash check payments for their agricultural produce. This situation led the Government of Ghana (GoG) to take several measures to increase access to credit in rural areas. After establishing an agricultural lending requirement for commercial banks and creating a publicly owned agricultural development bank, the GoG facilitated the
FACULTY OF ECONOMICS AND BUSINESS ADMINISTRATION
RESEARCH PROPOSAL
ASSESSMENT OF CREDITS MANAGEMENT AMONG RURAL BANKS IN THE SUNYANI MUNICIPALITY: THE CASE OF CAPITAL RURAL BANK
BY
George Wiafe
Tel. 0246086125
DECEMBER, 2012
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
The introduction of Rural and Community Banks (RCB) into the financial sector of Ghana dates back to the late 1970s. To set the background to this paper it must be noted that before the establishment of RCBs in the late 1970s and the subsequent expansion of other service providers into rural areas, access to institutional credit for farm and nonfarm activities was scarce. People in rural areas resorted all manner of sources or means for credit to assist them in their respective business (Nair & Fissha, 2010).
As it was noted in the study of Andah & Steel (2003) many small farmers and fishermen did not have deposit accounts in commercial banks, and the collateral they had available was not satisfactory for commercial lending which posed a great deal of challenge to them in securing credits. The rural folks who were mainly peasant farmers have to resort to diverse sources for credits. The main sources of credit were moneylenders and traders that charged very high interest rates. In many rural communities, secure, safe, and convenient savings and payment facilities hardly existed.
When there is the need for them the rural folks to conduct financial transactions, many rural dwellers had to travel long distances to receive payments (such as salary and pension deposits), transfer funds, and cash check payments for their agricultural produce. This situation led the Government of Ghana (GoG) to take several measures to increase access to credit in rural areas. After establishing an agricultural lending requirement for commercial banks and creating a publicly owned agricultural development bank, the GoG facilitated the
References: Bank of Ghana (2004). Bank of Ghana (2008). Rural Banks Classification Data. Accra Mensah, W. A. 1993. “Study of the Rural Finance Sector in Ghana.” Unpublished paper Ranade, C. G. 1994. “Rural Finance in Ghana.” Accra. Unpublished paper The Republic of Ghana (2004), Ghana Banking Act (Act 673), Ghana Publishing Corporation,