BoG Set to Introduce Sweeping Reforms to Tackle Rising Non-Performing Loans and Unethical Lending

Accra, June 3 – The Bank of Ghana (BoG) is preparing to roll out a comprehensive directive aimed at curbing persistently high levels of Non-Performing Loans (NPLs) in the country’s financial sector. Governor Dr. Johnson Pandit Asiama made the announcement during the post-124th Monetary Policy Committee (MPC) meeting with bank CEOs held in Accra on Tuesday.

According to Dr. Asiama, the new directive will introduce firm, enforceable rules to restore credit discipline and ensure sustainable lending practices among regulated financial institutions. Central to the policy is the mandatory write-off of fully provisioned loans that have no realistic recovery prospects—except in cases involving related-party exposures.

He revealed that banks will be required to reduce their NPL ratios to a maximum of 10% of gross loans by December 2026. Other key components of the directive include:

• Stricter restructuring protocols, with reclassified loans only permitted after sustained repayment;

• Accelerated collateral recovery for long-overdue loans;

• Enhanced credit risk governance, with banks required to demonstrate the effectiveness of internal controls;

• More robust NPL disclosures, with monthly submissions to the central bank and added public transparency;

• Credit restrictions for borrowers identified as strategic or willful defaulters, who will also be blacklisted and have their details shared with sector regulators.

Dr. Asiama stressed that banks will now be obligated to publicly identify blacklisted defaulters in their audited annual financial statements. Additionally, these statements must include sector-by-sector breakdowns of their NPL exposures.

“This added layer of transparency will heighten regulatory and investor scrutiny over systemic credit risks,” he said. “These reforms are crucial to restoring asset quality and ensuring the long-term resilience of Ghana’s financial system.”

BoG Cracks Down on Unethical Lending Practices

In the same address, the Governor voiced strong concern over questionable interest rate practices observed among some banks. He revealed that certain institutions continue to apply interest charges on inactive loan accounts—leading, in some cases, to accrued interest exceeding the original loan amount.

“Such practices distort customer outcomes, overstate the value of loan books, and violate basic principles of fairness and transparency,” Dr. Asiama said. He urged all financial institutions to conduct immediate reviews of their pricing models to ensure they meet ethical and commercially justifiable standards.

Digital Lending Under the Spotlight

Dr. Asiama also disclosed that the Bank of Ghana is finalizing a new set of digital lending guidelines, scheduled for release by August 2025. He noted a rising tide of complaints involving online loan platforms—particularly those targeting young people and informal workers—accused of deceptive practices, excessive charges, and even harassment.

“These platforms are exploiting vulnerable Ghanaians under the guise of quick and easy loans,” he said. “We’ve heard troubling reports of threats, public shaming, and outright scams.”

The upcoming digital lending framework will outline clear requirements for:

• Licensing and authorization of digital lenders;

• Transparent disclosure of interest rates and fees;

• Protection of borrower data and privacy;

• Ethical debt recovery and collection procedures.

“Our aim is to shield borrowers from abuse while enabling responsible digital lenders—including banks and fintech partners—to operate within a regulated, transparent environment,” Dr. Asiama emphasized. He encouraged all institutions engaged in digital lending, either directly or through partners, to proactively align their practices with the impending regulations.

“Let us work together to build a financial ecosystem that is not only innovative but also fair, humane, and inclusive,” he concluded.