The Governor of the Bank of Ghana, Dr. Johnson Pandit Asiama, has ordered all regulated financial institutions to reduce their non-performing loans (NPLs) to not more than 10 percent by the end of December 2026. This directive aims to curb high levels of bad loans that continue to constrain lending and weigh on Ghana's economic development.
Banks Face Tight Deadline to Reduce Bad Loans
Dr. Asiama made this announcement at the Chartered Institute Of Restructuring and Insolvency Practitioners (CIRIP) Ghana–Bank of Ghana Forum in Accra. According to him, the industry's NPL ratio had declined to 16.1 percent at the end of June 2026, down from over 23 percent during the same period last year. However, this is still considered too high, even if it is fully provisioned.
Banks to Implement New Strategies to Reduce Bad Loans
The Governor emphasized that banks would be expected to achieve the target through stronger credit appraisal processes, board-approved strategies to reduce bad loans, more effective loan recovery mechanisms, and the write-off of fully provisioned exposures with no realistic prospects of recovery. Dr. Asiama stressed that reducing bad loans is critical to expanding credit to the private sector and supporting economic growth.
Predictable Framework Needed for Business Rescue Financing
Dr. Asiama also underscored the need for a predictable and coordinated framework for business rescue financing. He called for clear rules governing restructuring processes, saying banks, insolvency practitioners, borrowers, and creditors require clarity on the evidence required, the controls that must be in place, the treatment of new and legacy exposures, and the consequences if a rescue fails.
Bank of Ghana Works with Stakeholders to Develop Framework
The Bank of Ghana is working with CIRIP Ghana, the Ghana Association of Bankers, the Institute of Chartered Accountants Ghana, and other stakeholders to develop a practical and risk-sensitive framework that supports business recovery while safeguarding financial stability. Dr. Asiama emphasized the importance of this framework in ensuring that post-commencement financing reinforces sound credit discipline, rather than weakening it.
The directive by the Governor of the Bank of Ghana is a significant step towards strengthening the banking sector and promoting economic growth in Ghana. As the deadline for reducing bad loans approaches, banks will need to implement effective strategies to achieve this target. The development of a predictable framework for business rescue financing will also play a crucial role in supporting businesses with credible recovery prospects.
Source: Joy Online
