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The Chief Manager of Banking Supervision, Bank of Ghana (BOG) on Thursday urged managements of rural banks to form alliances to meet the GHC150,000 minimum capital required by the Central Bank to remain in competitive business. Mr Raymond Amanfu noted that forming strategic alliances and mergers would enhance capital acquisition and deposits to support worthy ventures and help provide financial services for their customers. Mr Amanfu made the call at a stakeholder's dialogue on the challenges of rural banks with regard to the minimum capital requirement and it effects on the three Northern Regions in Accra. It was a follow-up to a research initiated by the North-Eastern Chapter of the Association of Rural Banks and undertaken by Managing Consultant of Pinnacle Investment and Trade Aid Integrated. The research indicated that the increase in the minimum capital from GHC50,000 to GHC150,000 without the corresponding measures to support distressed Rural Community Banks (RCBs) could result in the demise of most rural banks particularly those in the northern sector of the country. It also indicated that most of RCBs in the northern sector had difficulty in paying dividends, which serves as a disincentive to investment and affect their ability to raise further capital. According to the research findings some major challenges confronting RCBS included the GHC2,000 loan ratification policies, which led to a delay in serving some of their clients who demanded loans above GHC2,000. Mr Amanfu said most rural banks in the Northern Region were performing better than their counterparts in the south, adding that with the appropriate measures they would be kept in business. He noted that the BOG had to review some of its rules such as deadlines in favour of the rural banks even though it did not distinguish between rural and urban banks. Mr Amanfu called on managements of rural banks to target the metropolitan, municipal and district assemblies and high networked individuals who could invest to increase capital instead of depending solely on deposits. "Managements of rural banks should make the necessary arrangements to increase capital and not wait until BOG surprised them by announcing the new minimum capital, "he said. Mrs Eunice Osei Bonsu, Manager, Research, Marketing and Corporate Affairs, ARB Apex Bank, said establishment of banks required huge capital and advised that it was incumbent on them to find the needed capital before beginning to operate. She urged managements of the banks to establish effective structures to identify and mitigate incidence of risks, which could adversely affect their operations. Mr Kwadwo Konadu Asiamah, Director of the Association of Rural Banks noted that members accepted in principle the increase in minimum capital but the high increase from GHC50,000 to GHC150,000 was worrying because most rural banks could not meet the target. He stressed the need for intensified education to sensitise managements of the banks on the possibility of the alliances and merging. Mr. John Asabigi, President of the North-Eastern Chapter of Rural Banks commended the Business Sector Advocacy Challenge (BUSAC) for their advocacy role to the banks. He appealed to the appropriate authorities, especially BOG to review the minimum capital to commence business to enable RBCs to undertake their operations to address poverty in rural communities. Mr Asabigi said there was the need for BOG and other partners in development to create an enabling environment for more rural banks to be established in the rural areas to alleviate poverty.