Global Journal of Management Studies and Researches, 1(5) 2014, Pages: 311-323 Academic Journals Global Journal of Management Studies and Researches www.academicjournalscenter.org ISSN 2345-6086 The Role and Impact of Rural Banking on SME’S (Small Medium Enterprise) in Ghana David Ackah *1 , Moses Pangka Kondegri 2 , Makafui R. Agboyi *3 1. PhD, Department of Business & Economics, Atlantic International University – AIU, Hawaii, Honolulu, U.S.A 2. MSc of Finance, Department of Business & Economics, Atlantic International University – AIU, Hawaii, Honolulu, U.S.A 3. MSc of Supply Chain Management, Faculty of Engineering & Computing, Conventry University, United Kingdom *Corresponding author: Makafuiagboyi@gmail.com ARTICLE INFO ABSTRACT Keywords: Trade Liberalization Import The existence of rural banks has made banking available to the ordinary Ghanaian and nullified the perception that it is an organization for the educated and privilege few. This has stimulated banking operation and led to increase in the growth of SME sector. This study examined the role and impact of rural banking on SME’s (small medium enterprise in Ghana). The Purposive sampling procedure was used to select ten members of staff of Union Rural bank to form the sample. Data were collected from both primary and secondary sources of data collection and questionnaire served as the main primary data collection instrument. From the analysis it was clear that the role and impact of rural banking on SME’s has been tremendous. The bank has monitoring measures in place to ensure that the rate of default is minimized. The bank also provides business advisory services to the business operators. Occasional default by some clients, insufficient funds to meet demand for advances and lack of logistics for ensuring effective monitoring of the loan scheme are the main challenges that the bank encounters with the loan facility. It is therefore important for the rural banks to put in place the necessary educational programmes for all the customers to understand the operation of the loan facility and Minimize loan repayment default. © 2014 Global Journal of Management Studies and Researches. All rights reserved for Academic Journals Center INTRODUCTION 1.1 BACKGROUND OF THE STUDY The 1992 constitution of the Republic of Ghana makes a commitment to rural development as part of a national strategy to improve the living conditions in rural areas. In spite of the name, rural banks are found in both rural and urban settings. They are supervised by both the central bank and the ARB Apex bank which is the umbrella bank for all rural banks. In recent times they have integrated into the payments and banking systems in the country though it is believed that they have existed informally for a very long time. The existence of rural banks has made banking available to the ordinary Ghanaian and has made it less frightening. Their operations include credit and deposit services for relatively poor clients (SME’s). The generally expected roles of Union rural bank on small and medium enterprise in Ghana are to:  Mobilize savings from SME’s in Ghana.  Accept cash and Cheques from the crediting of current and savings accounts.  Ensure a proper and accurate handling of all money transactions entrusted to the union rural bank.  Provide trustworthy and sound accounting to their customers (SME’s) and accept securities for safe custody.  Engage in any activities that will promote social and economic development of the community (World Bank – Africa Region, 1999).