The Governor of the Bank of Ghana, Johnson Pandit Asiama, has instructed every regulated financial institution across the country to reduce its stock of nonperforming loans to a maximum of 10 percent by the close of December 2026, cautioning that persistently elevated levels of distressed credit continue to restrict lending activity, weaken financial intermediation and slow Ghana’s broader economic transformation.
The Governor emphasised that although the banking industry has recorded considerable improvement in restoring the strength of institutional balance sheets following years of financial sector reforms and enhanced regulatory oversight, additional effort remains essential to improve asset quality, reinforce prudent lending practices and unlock greater access to financing for businesses operating within the productive sectors of the economy.
Addressing participants during the Chartered Institute of Restructuring and Insolvency Practitioners Ghana together with the Bank of Ghana Forum in Accra, Dr Asiama revealed that the banking industry’s nonperforming loan ratio had declined to 16.1 percent by the end of June 2026 after exceeding 23 percent during the corresponding period in 2025. He further disclosed that the sector’s Capital Adequacy Ratio had strengthened to 20.4 percent, reflecting the improved resilience of financial institutions and their enhanced capacity to withstand potential risks.
According to the Governor, the stronger capital position now enjoyed by banks provides greater flexibility to undertake carefully evaluated lending decisions. Nevertheless, he stressed that the prevailing level of impaired loans remains far above an acceptable threshold and continues to pose a significant obstacle to sustainable credit expansion.
He observed that the decline in the industry’s nonperforming loan ratio demonstrates encouraging advancement, yet insisted that the achievement falls short of the standards expected by the central bank. Dr Asiama therefore reaffirmed that every regulated financial institution is required to bring its nonperforming loan ratio down to no more than 10 percent before the end of December 2026 in accordance with the Bank of Ghana’s supervisory directives.
The Governor explained that financial institutions are expected to attain the prescribed benchmark by strengthening credit assessment procedures before loan approval, implementing comprehensive strategies endorsed by their respective boards to reduce distressed assets, intensifying loan recovery operations and writing off fully provisioned facilities where there is no credible prospect of recovering outstanding obligations.
He maintained that lowering the volume of distressed credit is indispensable to expanding financing for the private sector, improving business confidence and accelerating national economic growth. He explained that elevated levels of nonperforming loans immobilise capital resources, increase the cost of debt recovery and substantially limit the capacity of banks to extend fresh credit, particularly to smaller enterprises and borrowers regarded as carrying higher levels of risk. For that reason, he indicated that reducing bad loans should not merely be regarded as a regulatory requirement but rather as an important component of Ghana’s national development strategy.
Dr Asiama also highlighted the importance of preserving rigorous credit discipline as Ghana advances the implementation of the Corporate Insolvency and Restructuring Act, Act 1015, which provides financially distressed yet commercially viable businesses with an opportunity to undergo restructuring instead of immediate liquidation.
He emphasised that although banks should remain prepared to support enterprises with realistic prospects of recovery, any post commencement financing must strengthen prudent lending discipline rather than conceal existing losses or weaken established risk management standards.
The Governor further advocated the establishment of a coordinated, transparent and predictable framework to guide business rescue financing, stressing that banks, insolvency practitioners, borrowers together with existing creditors require unambiguous regulations governing restructuring arrangements. He argued that Ghana must move away from improvised decisions made on individual cases and instead develop a consistent framework that clearly defines the evidence required for restructuring, the safeguards that must be implemented, the treatment of existing and newly created financial exposures and the consequences arising where business rescue efforts ultimately prove unsuccessful.
Dr Asiama disclosed that the Bank of Ghana is collaborating closely with the Chartered Institute of Restructuring and Insolvency Practitioners Ghana, the Ghana Association of Bankers, the Institute of Chartered Accountants Ghana and other key stakeholders to formulate a practical, balanced and risk sensitive framework capable of supporting corporate recovery while simultaneously protecting the stability, resilience and integrity of Ghana’s financial system.
