On June 03, 2025, the Central Bank published a statement on five (5) key regulatory initiatives to restore credit discipline and manage the perennially high Non-Performing Loans in the financial sector. Metis Decisions Limited fully supports the Bank of Ghana’s call for greater transparency and market discipline. We find it to be consistent with global best practice in risk-based supervision and regulation. That notwithstanding, there are legitimate concerns regarding certain aspects of the policy package. Based on insights from our work in the bank and non-bank financial sector, it is our view that some aspects of the measures to restore credit discipline do not go far enough.
As announced, the following measures formed the basis of the regulatory guidance paper:
- Mandatory write-offs of fully provisioned loans with no realistic recovery prospects, excluding related-party exposures.
- Cap NPL ratios at 10% of gross loans by December 2026.
- Tighten restructuring rules, requiring sustained repayment before reclassification.
- Enforce timely collateral recovery, especially for overdue loans.
- Strengthen credit risk governance and require proof of effectiveness.
- Enhance NPL reporting and disclosure, with monthly submissions and public transparency.
- Restrict further credit to strategic or wilful defaulters and share their identities with key financial sector oversight bodies.
- As part of this directive, banks will also be required to disclose blacklisted wilful defaulters in their audited financial statements, along with sectoral breakdowns of NPL exposures.
The full article was published in the Business and Financial Times (B&FT) weekly newspaper. A free copy will be sent to you via email or WhatsApp upon request.
