BoG Orders Rural Banks to Convert into Community Banks in Major Microfinance Reform

BoG Orders Rural Banks to Convert into Community Banks in Major Microfinance Reform

The Bank of Ghana (BoG) has unveiled a sweeping overhaul of the country’s microfinance sector, ordering all Rural Banks to transform into Community Banks by March 31, 2026.

This directive is contained in the new Guidelines on the Revised Microfinance Sector Framework, aimed at improving financial stability, strengthening governance, and expanding access to financial services.

As part of the reform, the previous Tier 1–4 classification system has been scrapped and replaced with four new categories: Microfinance Banks, Community Banks, Credit Unions, and Last-Mile Providers. The ARB Apex Bank will also be restructured to function as a centralized shared-services institution supporting the entire microfinance industry.

Under the new framework, Community Banks will operate as licensed deposit-taking institutions serving both rural and urban areas. Former Rural Banks must complete their conversion by March 31, 2026, and meet updated capital requirements by December 31, 2026.

These include a minimum capital of GH¢5 million for Community Banks and GH¢10 million for newly established urban Community Banks.

The reforms further require financial institutions to adopt broader community-based ownership models, with at least 30% of shares held by identifiable individuals or groups within their operational areas. New limits on maximum shareholding have also been introduced to encourage wider ownership participation.

Banks that cannot meet the revised capital thresholds must inform the BoG of their preferred recapitalization strategy by June 30, 2026, and submit progress reports by September 30, 2026. Available options include independent recapitalization, mergers and consolidations, or supervised transfer of assets and liabilities.

The framework also introduces a new class of Microfinance Banks, which will require a minimum capital of GH¢50 million for existing institutions and GH¢100 million for new entrants. Eligible institutions must confirm their transition plans by June 30, 2026.

Additionally, Credit Unions with assets of at least GH¢60 million will now fall under the direct regulatory oversight of the Bank of Ghana, while informal savings operators such as susu collectors and rotating savings groups will be categorized as Last-Mile Providers.

The ARB Apex Bank’s expanded role will cover reserve management, emergency liquidity assistance, cheque clearing, fintech infrastructure, and regulatory inspections.

According to the Bank of Ghana, the reforms are intended to resolve persistent capitalization and governance challenges, modernize the microfinance industry, and promote greater financial stability and inclusion.

All affected institutions are expected to complete the transition by December 31, 2026.