The Bank of Ghana (BoG) has unveiled a series of regulatory reforms targeting key areas within the banking sector. Announced during a post-Monetary Policy Committee meeting with Managing Directors and CEOs of commercial banks, these measures aim to address rising non-performing loans (NPLs), enhance transparency, and regulate digital lending practices.
Central to the BoG’s reforms is the directive to cap NPL ratios at 10% of gross loans by December 2026. This initiative seeks to align Ghana’s banking practices with international standards and mitigate credit risk within the sector.
To achieve this, banks are mandated to tighten loan restructuring rules, ensuring that reclassification of loans as performing is contingent upon sustained repayments. Additionally, the BoG emphasizes the importance of timely collateral recovery and robust credit risk governance.
In a bid to promote accountability, the BoG now requires commercial banks to disclose blacklisted willful defaulters in their audited financial statements. This move aims to enhance transparency and deter strategic defaults. Furthermore, banks are instructed to share the identities of such defaulters with key financial sector oversight bodies, restricting further credit to these individuals or entities.
The Governor stated that the central bank would soon release guidelines designed to address chronic loan defaults across regulated financial institutions. He noted that the Bank of Ghana would engage with the leadership of the banking association before finalizing and issuing the new measures.
While details of the directive are still under review, the Governor disclosed that the guidelines will include provisions requiring banks to write off fully provisioned loans that have no realistic prospects of recovery. However, he clarified that the directive would exclude related party exposures from the mandatory write-off requirement.
The move is seen as part of the central bank’s broader efforts to enhance financial stability and improve asset quality within the banking sector.
Addressing concerns over opaque pricing in digital lending, the BoG plans to cap Optional Issuer Fees (OIFs) on cross-currency card transactions at 2%. Banks will also be required to disclose all applicable fees to customers before transaction completion. This measure is designed to restore consumer trust and ensure fair treatment within the digital financial ecosystem.
“We will require the mandatory disclosure of all applicable OIFs to customers before a transaction is completed.” Said the Governor. “Now, beyond this, we are also concerned about broader pricing practices that prevail in the sector. Indeed, we have received reports that some banks continue to apply interest charges on credit accounts that remain inactive.”
The BoG has identified unethical practices where banks apply interest charges on inactive credit accounts, leading to accrued interest surpassing the original principal. Such practices are deemed unacceptable, and banks are expected to review and adjust their pricing models to reflect ethical and commercially defensible standards.
“We’ve noted a growing trend in the application of optional issuer fees or what is called OIFs when it comes to cross-currency card transactions. In principle, we recognize that these fees may reflect real costs. However, opaque pricing and limited disclosure have already begun to erode consumer trust and the integrity of payment systems.” He noted
To reinforce the resilience of the banking sector, the BoG’s reforms include mandates for banks to enhance their credit risk governance frameworks. This involves providing proof of effective risk management systems and ensuring monthly submissions of NPL reports for public transparency.
The BoG’s regulatory measures will be implemented in phases, with certain directives taking effect from July and August 2025. The cap on NPL ratios is slated for enforcement by December 2026, providing banks with a transition period to align with the new standards.
Financial experts have lauded the BoG’s proactive approach. Analysts suggest that these reforms will not only stabilize the banking sector but also enhance investor confidence. By addressing systemic issues such as high NPLs and lack of transparency, the BoG aims to create a more robust and trustworthy financial environment.
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