The Bank of Ghana (BoG) has directed all regulated financial institutions to decrease their Non-Performing Loan (NPL) ratios to below 10 percent by December 2026 to strengthen credit conditions and the banking sector’s overall resilience.
Speaking at a forum on restructuring distressed companies, Governor Dr Johnson Pandit Asiama noted that while bad loans dropped from 23.1 percent in June 2025 to 16.1 percent in June 2026, the current figures still limit the sector’s ability to expand credit to households and businesses.
He cautioned that the recent statistical improvements do not mean the challenge is fully resolved.
“The industry’s non-performing loan ratio has declined to 16.1% as of the end of June this year, down from over 23% a year ago, while the capital adequacy ratio stood at 20.4%. Capital at that level gives banks the room to take considered risks. But while this represents progress, it is not sufficient,” he stated.
“Our regulatory measures require every regulated institution to reduce its NPL ratio to no more than 10% by the end of December this year, supported by stronger credit appraisal, credible NPL reduction plans, effective recovery functions, and the write-off of fully provisioned exposures with no realistic prospect of recovery,” he added.
Highlighting the broader economic impact of the directive, Dr Asiama explained, “High non-performing loans tie up capital. They raise recovery costs and restrict new credits, most severely for smaller and higher-risk borrowers. Reducing them is therefore not merely a supervisory concern. It is part of Ghana’s development agenda.”
The central bank’s directive comes amidst robust growth in the banking industry.
Total assets expanded by 30.7 percent year-on-year to reach GH¢502.4 billion in June 2026, whilst the sector’s solvency strengthened considerably as the Capital Adequacy Ratio rose from 10.6 percent to 20.4 percent over the same period, providing banks with a stronger capital buffer to absorb potential shocks and support lending.
By: Rainbowradioonline.com/Ghana
