BoG clamps down on loan defaulters, tightens rules

By Praisebell Rosemond Larbi

The Bank of Ghana (BoG) is rolling out a series of sweeping regulatory reforms targeting willful loan defaulters, non-performing loans (NPLs), unsafe digital lending practices, and weak governance structures within commercial banks. The central bank’s Governor, Dr. Johnson Asiama, announced the measures during a high-level engagement with managing directors and chief executive officers of commercial banks at Bank Square in Accra on Monday.

New Disclosure Requirements for Loan Defaulters
As part of the reforms, all commercial banks will now be mandated to publicly disclose blacklisted willful defaulters in their audited financial statements. They will also be required to provide detailed sectoral breakdowns of their NPL exposures.

“Commercial banks are also required to restrict further credit to strategic or willful defaulters and share their identities with key financial sector oversight bodies,” Dr. Asiama said.

The meeting was part of the Bank of Ghana’s post-Monetary Policy Committee engagements with critical stakeholders in the country.

The measures are aimed at enhancing transparency, mitigating credit risks, and restoring confidence in Ghana’s financial system.

Capping NPL Ratios by 2026
To reduce high levels of non-performing loans, the Governor announced that commercial banks must cap their NPL ratios at a maximum of 10 percent of gross loans by December 2026.

Banks will also be compelled to adopt stricter loan restructuring rules that require evidence of sustained repayments before any reclassification of defaulted facilities. Additionally, monthly reporting on NPLs will now be mandatory, with public disclosures required to enhance accountability.

“These actions are part of our broader agenda to restore asset quality, promote sound lending practices, and safeguard the resilience of Ghana’s financial system,” Dr. Asiama explained.

Digital Lending Under Tight Scrutiny
Concerned about predatory lending practices by online platforms, the Bank of Ghana is finalizing comprehensive digital lending guidelines, set to be issued by August 2025. Dr. Asiama warned that many Ghanaians have been lured into exploitative debt cycles by digital lenders who charge hidden fees and resort to unethical recovery practices.

“As a regulator, we cannot allow this to go on, hence these new rules will establish clear, enforceable standards across both bank-led and non-bank digital lending models,” he emphasised.

The upcoming guidelines will address key areas, including:

• Licensing and authorization
• Interest rate and fee transparency
• Customer data protection and privacy
• Ethical debt recovery practices

Dr. Asiama urged all banks involved in digital lending—either directly or through third-party partnerships—to immediately review their operations in anticipation of the new compliance regime.

Reinforcing Governance in Foreign-Owned Banks
In another major policy shift, the central bank will soon issue a directive aimed at strengthening governance and board independence in foreign-owned banks operating in Ghana. This move comes amid rising concerns about the outsourcing of key credit and risk decisions to offshore headquarters, leaving local boards to act merely as rubber stamps.

“These decisions are often passed down to Ghanaian boards for formal ratification, giving the appearance of local governance, when in fact, core decisions have already been made externally,” Dr. Asiama noted.

He emphasized that Ghana-based boards must exercise real authority and not simply implement directives from foreign principals, as such practices undermine regulatory oversight and create “unacceptable blind spots.”

Conclusion
The latest measures from the Bank of Ghana signal a tougher regulatory stance aimed at strengthening the financial sector’s integrity, boosting transparency, and protecting consumers. As the country continues its post-pandemic economic recovery, these reforms are expected to improve credit discipline, encourage responsible lending, and reinforce investor confidence in the banking sector.