The Bank of Ghana (BoG) has directed commercial banks to reduce their non-performing loan (NPL) ratios to below 10 per cent by the end of 2026.
The report indicates that the Bank of Ghana (BoG) has directed commercial banks to reduce their non-performing loan (NPL) ratios to below 10 per cent by the end of 2026.
It further notes that the Central Bank stated the reduction was necessary to strengthen financial stability, improve credit growth and support sustainable financing of businesses.
Dr Johnson Pandit Asiama, BoG Governor, reiterated the directive at a high-level forum organised by the Chartered Institute of Restructuring and Insolvency Practitioners (CIRIP), Ghana, in Accra.
The forum, supported by the BoG, was on the theme: “Financing distressed companies: The impact of NPLs, IFRS nine standards and prudential regulations on post-commencement financing for distressed companies under rescue and possible interventions.”
In June 2025, the Central Bank directed all RFIs to keep NPL ratios at or below 10 per cent, noting that RFIs that would breach the directive after December 2026 must notify the regulator within 10 days and submit a board-approved reduction plan.
Dr Asiama stated NPL ratios had declined to 16.1 per cent by June 2026 from more than 23 per cent in 2025 following regulatory measures introduced by the Central Bank.
“That is progress and not sufficiency, and 16.1 per cent remains too high, even if it is fully provisioned. Our regulatory measures require each regulated institution to reduce its ratio to no more than 10 percent by the end of December this year,” he said.
Dr Asiama stated high levels of non-performing loans constrained banks’ ability to extend new credit, increased recovery costs and absorbed capital, particularly affecting smaller and higher-risk borrowers.
He stated reducing NPLs was therefore not only a supervisory requirement but also part of efforts to support Ghana’s broader economic development objectives.
On financing distressed companies, the Governor stated Ghana’s Insolvency and Restructuring Act provided a framework for restructuring viable businesses instead of liquidating them.
“Rescue must begin with a credible test of viability; banks must distinguish between firms facing temporary cash flow shocks and those postponing inevitable failure,” he said.
He cautioned that without proper viability assessments, lenders risked concealing losses and weakening credit discipline.
Dr Asiama encouraged banks to ring-fence and monitor new financing provided to distressed companies and ensure that such funds were directed towards productive activities, including retaining employees, securing inputs and completing contracts.
“Legal priority alone does not make a transaction prudent or bankable. Post-commencement financing must be structured with clear milestones, security arrangements, and transparent reporting,” he said.
