Accra, Ghana — The Bank of Ghana has called on financial institutions to uphold a strong Credit Risk Management Framework to minimize Non-Performing Loans (NPLs).
In a notice addressed to banks, Specialized Deposit-Taking Institutions, non-banking financial institutions, and the public, the central bank emphasized that Regulated Financial Institutions (RFIs) must consistently strengthen their credit risk management functions and processes in line with the Bank of Ghana’s requirements, ensuring they can demonstrate the effectiveness of these measures to the central bank.
BOG STATEMENT
“The Board of an RFI is responsible for approving and regularly reviewing, at least once a year, the credit risk management strategy and policies of the RFI. Additionally, an RFI must, among other things, have in place,” it added..
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The Bank of Ghana stated that RFIs must ensure the NPL ratio, which represents non-performing loans to gross loans, remains below 10.0% or any other limit set by the BOG over time..
However, microfinance Institutions are required to comply with their existing prudential NPL ratio limit of 5%.
It added that the Board-approved NPL reduction plan shall be aimed at returning the RFI to full compliance within one year.
FURTHER STATEMENT
It further stated that RFIs with NPL ratios exceeding the prudential limit will, starting from January 1, 2027, face restrictions on paying dividends and bonuses, expanding their loan portfolios, and lending to related parties or sectors of their credit portfolio with NPL ratios above the prudential limit, except for cash-backed facilities.
To restructure NPLs for eligible borrowers, RFIs may start the process by revisiting the loan facility and discussing feasible payment options with borrowers. They can also restructure loans upon the borrower’s request to improve the affordability and sustainability of repayments. This approach aims to reduce potential losses for RFIs caused by defaults or a decline in borrowers’ creditworthiness.
To uphold the integrity of RFIs’ financial statements, it encouraged RFIs to properly classify and treat restructured loans in line with IFRS 9 impairment requirements and BOG’s prudential loan classification and provisioning standards.
Last Updated on August 13, 2025 by Samuel Kwame Boadu
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