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Why Ghana Banks Disappoint Their Customers
 
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28-Oct-2009  
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Almost every day banks cast their nets in a desperate attempt to catch more into their pool of customers. Their ‘sales evangelists’, embark on marketing outreaches, intelligently articulating their packages with the respective appetizing benefits. As they do, they siphon any mist of doubt in your confused mind.

As a result, customers ride the royal reception and the embracing warmth of their marketing cloak and enter in financial marriages with the banks.

After the deal of mutual interests have been brokered between both parties with financial benefits, customers expect a high sense of urgency and respect from these banks when it gets to their turn to be served.

But time without number the customers receive the short end of the deal stick. They become disgruntled, angry and disappointed. It is usually surprising for a customer that an account can be opened at the speed of light but it takes much longer for a loyal customer with good account records to get served.

On the other hand, the banks always provide an endless list of requirements the customer has to meet before they are given a loan. It is sad to say that most of the customers provide the needed documents but it takes the banks a long time to give a green light to signal qualification.

Unfortunately, the overwhelming excitement that grips a customer and leads to a decision to open an account runs to a tipping point when the customer is required to present tons of documents for bank loans.

Some of the tenable reasons the banks usually give for their delay or inability to give a loan facility include customer’s account history, business model, collateral portfolio, feasibility rating, identity credit, juicier options, turnover period and the bank’s performance. Most of these excuses, when explained, tend to stand on weak limbs. Sadly, the customers are not exposed to these pitfalls from the beginning of this journey.

Customer Account History

The entry reason usually touted for eligibility for a loan is the customer’s account records. A consistent and active account of a customer beeps on the radar of banks as a milk-laden cow. Sales executives are assigned to the account to guard the owner jealously with customer service perfection. They are instructed to monitor and follow up on any developments which will indicate positives in the account. As a result, the customer savours the pampering treat while it lasts.

A good account holder clearly should be eligible for a loan in time of need. However, the banks tend to offer a weak arm instead of a helping hand. Needless to say that the same sales executive sent to bodyguard their tributary of inflows are used as signals to inform about the apparent mishap regarding your inability to access a loan. Time without number, the customer is asked to run the account for some time to mark up their eligibility. It usually sounds ridiculous to be asked to run an account when the customer needs the money to inject into the business.

Business Model

Next on the list of placard of requirements flashed to the customer after having a good track record of an active account is the kind of business they run. The customer is asked to expatiate on the model been used to run the business they want the stimulus for.

Having talked to quite a number of customers, it is sad that this question is raised at the time when the customer finds him or herself on the wrong side of situations. Most customers are shocked that the banks play ignorant when it comes to the business model they are practising.

Collateral Portfolio

On top of a good account history and business model is the collateral portfolio of the customers. It is the most common red flag raised to most customers in the quest for a financial jolt. It is needed to guarantee for the loan which will be given, in case of defaulting in payment. This usually make of no effect the previous requirements; in fact any other requirements. Collateral serves as the cold cash for hard cash. Anyone with collateral can walk into a bank and bank away any amount of money equivalent to the collateral portfolio.

Unfortunately, most customers of banks do not have a good collateral portfolio to guarantee their loan. They are either sympathized with and soon the door gently closes behind them or they are informed about the bank’s policy to withhold the giving of loan. Usually, the amount a customer may need is one-fiftieth of the amount they have deposited into an account within a short period between six months to a year.

Feasibility Rating

A feasibility rating is done in order to determine the repayment duration and frequency. If it does not fall within the indexes of the banks, denial is final. This rating is never done where collateral applies. No bank cares about the feasibility of a project if collateral is provided. To a bank, the law of feasibility states that a customer should have enough money in the respective account which must cover for 50% of the loan, the frequency of the customer’s ability to pay back and the shortest possible time payment can be completed. (Emphasis mine)

Normally, customers who engage in commerce are considered more viable in loan repayments. Those in the buy and sell trade have banks give them a firmer handshake when it comes to repayment performance. The seasonal-cash-cows are not rated favourably in feasibility measures.

Identity Credit

To a bank, the identity scribbled on well-designed application forms is never a good reference. They go steps further to find more information about the customer. This is what makes it important to be dealing regularly with an account manager who a customer can lodge any complaints to or make recommendations to when necessary. It pays to be very friendly to the bank managers and sales executives. They, in the long run, can speak on behalf of the customer or offer a hand of empathy than a heart of sympathy; the former may lead the customer through the doorway but the latter leads out of the door in the long run.

Identity is very crucial to qualify for a loan when collateral is not available. Most often, overdrafts and PO payments are made by the bank based on the account history and the identity credit the customer has with the bank. It is very important on the part of the customer to also reciprocate the banks help with prompt repayment.

Option Opportunities

Business, for that matter profit-making adventure, is the perfect scaling of choices. The banks also battle between giving the loan to a customer and investing it in a profitable venture which yields speedily and highly. They try meticulously to find a happy medium during every profit-making expedition. They always want to know, of a certainty, the option that has a greater balance of profit over the others.

Therefore, customers must also be in the known as to what makes the banks lick their lips when it comes to loan administration. The juicier the fruit the faster the loan is given. The banks have many alternatives to invest in for quick and huge profits. They can invest in treasury bills, assets and other businesses to support the main stream of profit.

Turnover Period

Loans are given within a period of time where repayment is expected to begin or end. The shorter the time to make more profit, the better for the banks and the faster the release of the loans. But it is sad to say that most customers want loans for a short-term project which to the banks may not yield good profit. For the banks, the longer the time the bigger the profit.

Even though short time payment periods do not attract the attention of the banks, businesses with fast turnover periods very much qualify for the loan. A good turnover and timely repayment will win the heart of the bank over. Most at time long repayment periods are given if only the flow of income can be ascertained and assured.

Bank’s Performance

The performance of banks also comes in as an influential aggregate in determining loan administration. A good performing bank is business-sensitive and customer-centric. On the flipside, poor performing banks do not want to trade in stormy waters of sinking fortunes. They would prefer to invest in the capital market than barter their diming prosperity for the goodwill of giving out loans.

Bad-record banks hardly give out loans without any collateral or surety of retrieval. Bad loans which eat deeply into the performance of banks become smoke signal to their inability to give loans or delay it.

Conclusion

It is without a bit of doubt that most banks in Ghana do not give out loans on goodwill. Many of the customers are those with ‘collateral portfolio poverty’ in addition to other requirements. More so, most banks have fallen victim to fraudsters. This and other acts of evil have put many banks on red alert and resistance.

However, it is never a victory of common sense to deny customers who feed the growing profit-bags of these hitherto lean banks. The large army of customers without collateral portfolios serve as the strongest props to the banks and so they must be equally given a respectful attention and a helping hand. Their hopes to equally benefit from financial assistance must not attract low interest from the banks.
 
 
 
Source: Maximus Ametorgoh
 
 

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