Accra,- Mr Solomon Akwetey (NDC-Suhum) said today rural banks should be exempted from company tax to enable them to improve on their performance and initiate development programmes in their cat In a statement to parliament, he said though ”these banks are exempted from taxation for the first ten years of their operation, their small capital base and other problems make them financiall The exemption from company tax will therefore make it possible for them to mobilise savings and enable th Supporting this argument, Mr Michael Teye Nyaunu (NDC- Lower Manya), said rural banks play a vital role in rural economies and called on the Bank of Ghana and the Ministry of Finance to re-capi Mr Charles O. Nyanor (NPP-Upper Denkyira) said the exemption will serve a useful purpose only if what should have gone as tax is ploughed back or used for a specific project. He said most rural banks have low capital base because they are engaged in “single crop banking”. The member suggested that ”these banks be amalgamated to enable them to cover a wide spectrum of commercial activities which will enhance their capital base. Mr Austin Gamey, deputy minister, Employment and Social Welfare, said an exemption may not necessarily solve the liquidity and other problems of the rural banks. What is needed, he said, is to raise the managerial capacities of these banks. The Bank of Ghana should embark on training programmes to enable the banks to turn around. ”If we exempt them from tax and the money is not utilised well, we will only be pouring water on stones. We need to encourage them to put in place programmes that will enable them to perform be Mr Kosi Kedem, NDC-Hohoe south, said instead of a tax exemption for the rural banks, their capital base should be reduced from the present 20 million cedis. He said it is unfortunate that only rural banks that are performing well are receiving assistance from the World Bank. ”Those which are distressed are rather not being helped.” Mr Kedem suggested to the Bank of Ghana to review the criteria for assistance. Mr Albert Kan-Dapaah (NPP-Afigya Sekyere west), suggested that if rural banks are exempted from tax, that money should be channelled to the productive sector of the rural sector like small scale cottage industries. He noted that some rural banks are deviating from the purpose for which they were set up and are now buying treasury bills. This is because they find it difficult to recoup loans that they give out, he added Mrs Grace Coleman, NPP-Effiduase Asokore, suggested that rural banks should get involved in the ‘economies’ within which they operate. ”If they sit in their offices for the monies to come, I am afraid they will be out of business”. She said there are a lot of things wrong with the banks and that their objectives should be reviewed as they seem to be competing with the established banks. Mr Jacob Arthur (NDC-Mfantsiman west) called for the establishment of a body like the Non-Performing Assets Recovery Trust to assist rural banks to recover loans granted by them.
