The Bank of Ghana (BoG) has directed banks and specialised deposit-taking institutions to reduce their non-performing loan (NPL) ratios to no more than 10 per cent by the end of December 2026, as the central bank pushes for stronger credit risk management and financial stability.
Governor of the Bank of Ghana, Dr Johnson Pandit Asiama, said although the banking sector’s NPL ratio had improved significantly, the current level remained too high and continued to constrain the ability of banks to extend fresh credit to businesses.
Dr. Asiama disclosed this at the BoG-CIRIP Ghana Forum on Non-Performing Loans and Post-Commencement Financing, held at Bank Square on Tuesday, August 4, 2026.
According to him, the industry’s NPL ratio declined to 16.1 per cent in June 2026 from 23.1 per cent a year earlier, while the sector’s Capital Adequacy Ratio stood at 20.4 per cent.
That is progress, not sufficiency, and 16.1 per cent remains too high,” Dr Asiama said.
He said regulatory measures were therefore requiring each regulated institution to bring its NPL ratio down to 10 per cent or below by December 2026.
The measures, he explained, include stronger credit appraisal, board-approved NPL reduction plans, effective loan recovery functions and the write-off of fully provisioned exposures with no realistic prospect of recovery.
High NPLs constrain new lending
Dr. Asiama warned that persistently high NPLs were tying up banks’ capital and increasing recovery costs, thereby restricting the flow of new credit, particularly to smaller and higher-risk businesses.
Reducing them is therefore not merely a supervisory concern; it is part of Ghana’s development agenda,” he said.
He stressed that efforts to provide post-commencement financing to distressed companies must reinforce, rather than undermine, banks’ credit discipline.
The Governor said the challenge was to strike a balance between supporting businesses that were temporarily distressed but fundamentally viable and preventing banks from continuing to finance companies with no realistic prospect of recovery.
Ghana does not have to choose between liquidating every distressed business and relaxing standards to keep businesses alive. A disciplined rescue framework can preserve viable businesses while protecting financial stability,” he stated.
BoG calls for credible viability assessment
Dr Asiama said the first requirement for rescuing a distressed company should be a credible assessment of its commercial viability.
He noted that businesses could become distressed because of temporary cash-flow shocks, changing market conditions or mismatches between receivables and obligations without necessarily being fundamentally unviable.
However, he cautioned that a company’s need for additional financing should not, by itself, be interpreted as evidence that the business could be rescued.
Most distressed companies need money. The first question is whether new money can reasonably restore the business to sustainable operations,” he said.
He said banks should assess the credibility and profitability of a company’s orders, the causes of its financial difficulties, its ability to generate sustainable cash flows and whether its restructuring plan addresses the underlying causes of distress.
The Governor said any rescue plan seeking bank financing must be supported by reliable information, realistic assumptions, capable management, transparent governance and a clear recovery path.
Distress in a borrower is not a reason to stop assessing. It is a reason to assess more carefully, and with greater urgency,” he said.
New financing must not hide old losses
Dr. Asiama also cautioned banks against using post-commencement financing to mask existing losses.
He explained that while the priority given to post-commencement financing under Ghana’s insolvency framework could improve the position of lenders providing fresh funds to businesses under administration, legal priority alone did not make a loan prudent or guarantee repayment.
He urged banks to ensure that new financing was properly controlled and directed towards activities capable of supporting the recovery of the business.
Such financing, he said, could be ring-fenced for specified operating requirements, paid directly to approved suppliers, managed through controlled accounts and repaid from identifiable proceeds.
The old losses do not disappear because new financing has been provided,” Dr. Asiama stressed.
He added that existing impaired facilities must continue to be properly recognised, classified and provided for under applicable prudential and accounting requirements.
Calling an exposure post-commencement financing cannot convert a weak loan into a good one,” he said.
He further ruled out any blanket exemption from IFRS 9 or prudential requirements simply because a facility was granted after administration had commenced.
BoG seeks predictable rescue framework
The Governor said Ghana needed a predictable framework for business rescue rather than a system based on case-by-case improvisation.
He said banks, insolvency practitioners, borrowers and existing creditors needed clarity on the evidence required to establish viability, the controls governing new financing, the treatment of existing exposures and the consequences when a rescue attempt failed.
Its purpose must be to convert the promise of Act 1015 into a coordinated, risk-sensitive and operational framework,” Dr Asiama said.
He said the Bank welcomed ongoing collaboration with the Chartered Institute of Restructuring and Insolvency Practitioners, Ghana Association of Banks, Institute of Chartered Accountants Ghana and other institutions to strengthen the framework.
The Governor said the roles of key stakeholders must also remain clear, with insolvency practitioners providing credible oversight, management remaining accountable for accurate information and execution, and lenders maintaining sound credit judgement.
BoG urges responsible risk-taking
Dr. Asiama said Ghana’s financial sector should not seek to eliminate risk altogether, noting that excessive risk aversion could prevent banks from financing viable businesses.
Our objective is not a system that avoids risk. Such a system would finance nothing worth financing. It is a system that understands risk, prices it properly, manages it actively and holds the capacity to absorb losses when judgement proves wrong,” he said.
He said the ultimate test would be whether bank credit committees could distinguish between businesses that deserved further financing and those for which additional funding would only postpone failure.
Able to say yes to the right business on the right terms, to say no where further financing would merely extend decline, and to know the difference,” Dr. Asiama stated.
He said business rescue and financial stability were compatible objectives, but any rescue programme must be anchored in commercial viability, transparency and accountability, rather than concealed losses or regulatory forbearance.
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