Ghana’s central bank has introduced stringent measures to tackle rising non-performing loans (NPLs) in its banking sector, setting a 10% NPL threshold for all financial institutions by December 2026.
The draft policy outlines ten key provisions that will fundamentally change how banks manage credit risk and delinquent borrowers.
Under the proposed rules, banks exceeding the NPL limit must submit board-approved recovery plans within six months or face penalties including dividend restrictions and expansion bans. In a move toward greater transparency, the policy mandates publishing names of wilful defaulters in national newspapers and blacklisting them from new credit for double their default period. Loans will only be reclassified after six consecutive repayments, while banks must initiate collateral recovery within 30 days of write-offs.
The Bank of Ghana is also demanding enhanced reporting, with monthly recovery updates required from institutions whose NPLs surpass 5%. Annual reports must now disclose sector-specific NPL exposures and defaulters’ identities, though exceptions apply for hardship cases.
This policy shift reflects growing concern over Ghana’s financial sector stability after recent banking cleanups. By enforcing stricter accountability for both lenders and borrowers, the central bank aims to reduce the NPL ratio from its current 14.3% while restoring discipline in credit markets. Analysts suggest the measures could significantly impact banks’ profitability and lending practices, particularly in high-risk sectors.
