BoG unveils tough new rules to tackle rising non-performing loans

The Bank of Ghana (BoG) has rolled out fresh regulatory measures aimed at curbing the surge in Non-Performing Loans (NPLs) across banks and other financial institutions, warning that the trend poses serious risks to profitability, liquidity, solvency, and the stability of the financial system.

In a notice issued this week, the Central Bank said the move re-emphasises existing prudential guidelines while introducing additional credit risk management controls aligned with international best practices.

Under the new framework, banks must maintain robust credit risk management systems capable of withstanding regulatory scrutiny. Institutions are expected to keep their NPL-to-gross loan ratio below 10% or within any limits prescribed by the BoG. Microfinance institutions, however, will continue to operate under their current prudential thresholds.

The BoG has also ordered that all fully provisioned loans in the “loss” category—as defined by its loan classification rules—be written off immediately, subject to prior written approval from the regulator. This directive also applies to substandard or doubtful loans where there is no realistic expectation of recovering the contractual cash flows.

The Central Bank says the measures are designed to strengthen credit discipline, protect consumers, and maintain confidence in Ghana’s regulated financial system, especially as demand for credit continues to grow.