The Bank of Ghana (BoG) has ordered banks and other regulated financial institutions to reduce their non-performing loans (NPLs) ratio to no more than 10 per cent by the end of December 2026, in a move aimed at strengthening the banking sector and improving access to credit. The directive, issued by BoG Governor Dr Johnson Pandit Asiama, places pressure on financial institutions to intensify loan recovery and improve the quality of credit they extend to customers.
The directive covers commercial banks, specialised deposit-taking institutions and non-bank financial institutions, while microfinance companies face a stricter NPL ceiling of five per cent. Institutions that fail to meet the target could face regulatory restrictions from January 2027, including a ban on dividend and share bonus payments and limits on expanding their loan portfolios. The measures are intended to encourage banks to deal more aggressively with bad loans rather than allow them to continue weighing down their balance sheets.
Ghana’s banking sector has already made progress, with the NPL ratio falling to 16.1 per cent at the end of June 2026 from more than 23 per cent a year earlier. The sector’s capital adequacy ratio also improved to 20.4 per cent. Despite these gains, Dr Asiama said the level of bad loans remained too high because they tie up bank capital, increase recovery costs and restrict lending, particularly to small and higher-risk businesses. He urged financial institutions to strengthen credit assessment, adopt board-approved NPL reduction plans and step up recovery efforts.
Speaking at a forum on non-performing loans in Accra, the Governor also called for a predictable national framework to support financially distressed but viable businesses. He said companies undergoing restructuring need access to financing, but such support must be carefully managed to protect financial stability. The forum, organised by the Chartered Institute of Restructuring and Insolvency Practitioners Ghana and the BoG, brought together regulators, bankers, policymakers, insolvency professionals and accounting experts to discuss the challenges surrounding rescue financing.
Former Finance Minister Seth Terkper also proposed the creation of a Fiscal Trust that could serve as a financial buffer during major economic crises and support both public and private sector bailouts. Meanwhile, CIRIP Ghana President Felix Addo said access to fresh funding remained a major challenge for distressed businesses because of IFRS 9 requirements and BoG prudential rules. As Ghana works to strengthen its financial system, the new NPL target signals a tougher approach to bad loans, with banks now facing a clear deadline to clean up their books and support stronger credit growth.
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