BESSFA was set up in 1983 and licensed to operate the business of banking by the Bank of Ghana (Ghana's Central Bank) under Act 339 of 1970. It started with an initial capital of GHs37.50 made up of GHs12.50 BOG preference shares and GHs25.00 ordinary shares. This law was aimed at creating banks to serve populations which would otherwise be cut off from financial services. The law allowed them to operate within a radius of about 20 miles. Currently, BESSFA now has 1,708 shareholders and GHs527,015 total shareholders' funds (including stated capital of GHs150,286.00) according to the 2008 financial reports.
Rural banking encompasses the provision of financial services and the management of small amounts of money through a range of products and a system of intermediary functions that are targeted at low income clients in their catchments areas. These products include loans, savings, insurance, transfer services and other financial products and services. The fact that these banks provide micro loan and finance to rural communities is important and basic. It is thus one of the critical dimensions of the broad range of financial tools for the poor and its increasing role in development has emanated from a number of key factors both socio-economic and political
However, most of the Rural Banks, including BESSFA, faced problems since the inception of this initiative, including poor financial intermediation, weak management and staff capacity, and low capitalisation. These developments contributed to a lack of public confidence in Rural Banks. Initially, the rural banks also had difficulty linking to the financial system (e.g., to obtain specie, purchase Treasury Bills, clear cheques) through correspondent commercial banks, which were also their competitors. These difficulties led BOG to close as many as 23 distressed Rural Banks.
To address these weaknesses, the ARB Apex Bank was created. It is owned by the rural banks. Its main objective is to strengthen the capacities of the rural banks individually and as a sub-sector in the financial services industry. Its mission includes transforming Rural Banks into efficient financial institutions serving their communities. ARB was granted a banking license in 2001 and commenced business in July 2002.
ARB Apex Bank offers a number of key services to Rural Banks including:
- Cheque clearing;
- Account maintenance services;
- Investment services;
- Funds transfer among Rural Banks;
- Credit facilities to meet liquidity needs;
- Supply of cash (bank notes);
- Guarantee support for Rural Banks' own cheques;
- Special assistance to distressed or marginal Rural Banks;
- Training of staff and directors;