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The Bank of Ghana (BoG) has announced a sweeping package of prudential and regulatory reforms aimed at decisively addressing the long-standing challenge of non-performing loans (NPLs) in the country’s financial system.
The new rules, set to be rolled out in phases beginning in January 2027, are designed to strengthen credit risk management, protect depositors, and reinforce the stability of Ghana’s banking and financial services sector.
At the heart of the reforms are stringent measures that include restrictions on dividend payouts and staff bonuses for banks with high NPL ratios, mandatory write-offs of bad loans, tougher accountability rules for defaulting directors and shareholders, and stricter disclosure requirements for institutions burdened with distressed assets.
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According to the BoG, the package represents a “fundamental recalibration” of the financial system, ensuring that lenders prioritise prudence and responsibility over short-term profits.
Key Features of the Reforms
- Dividend and Bonus Restrictions:
Banks and financial institutions with NPL ratios above 10% will be prohibited from paying dividends or granting staff bonuses. Those above 15% face immediate restrictions, including curbs on loan book expansion. For microfinance institutions, a stricter threshold of 5% has been set due to their higher vulnerability. - Mandatory Write-Offs:
Institutions will be required to write off fully provisioned loans, particularly those classified as “loss”. This prevents banks from carrying irrecoverable debts on their books while still retaining legal rights to recover funds. - Insider Accountability:
Directors, key management staff, and significant shareholders who default on loans for more than 180 days will be declared unfit to hold office. The BoG will have the power to withdraw approvals, enforce divestitures, and bar such individuals from future roles in the sector. - Name and Shame Policy:
Twice yearly, by June 30 and December 31, banks will be mandated to publish the names of major defaulters in newspapers and on their websites. This aims to discourage wilful defaults and bring transparency to the system. - Enhanced Reporting:
Institutions with NPL ratios above 7% must submit monthly reports to the BoG, disclosing sectoral loan exposures, write-offs, recoveries, and related party loans. Annual financial statements must also include detailed NPL disclosures.
Ghana’s NPL challenge is deep-rooted. At the height of the banking crisis in 2018, NPLs peaked at 23.5% before dropping to about 14% in 2020 after sweeping reforms. As of early 2025, however, NPL ratios hovered around 15%—well above the sub-Saharan African average of 10%.
Analysts blame the persistently high levels on weak credit risk assessments, insider lending, economic volatility, and poor corporate governance. The 2017–2019 sector cleanup revealed widespread under-provisioning and concealment of bad loans, weakening banks’ capacity to lend and stifling private sector growth.
Banking analysts have largely welcomed the reforms, describing them as “a bold step that places discipline at the heart of banking.” They argue that restrictions on dividends and bonuses will finally compel institutions to prioritise loan quality.
Consumer advocacy groups have also praised the publication of defaulters’ names, noting it will expose powerful individuals who previously hid behind banking secrecy while defaulting on loans.
However, some industry players have voiced concerns over potential investor hesitation, warning that uncertain dividend payouts could discourage fresh capital injections.
The reforms align Ghana with international best practices such as IFRS 9 provisioning standards and mirror similar measures adopted in Nigeria and Kenya. Analysts say Ghana’s approach is unique for its comprehensiveness, combining prudential rules, insider accountability, reputational deterrents, and enhanced transparency.
If effectively implemented, the reforms are expected to strengthen banks’ balance sheets, boost depositor confidence, and enhance credit availability to key sectors like agriculture, manufacturing, and SMEs. Over the medium term, a cleaner loan book could also reduce borrowing costs as banks face lower risk premiums.
Ultimately, the BoG’s reforms seek to break Ghana’s cycle of weak credit culture. By demanding prudence, transparency, and accountability, the central bank is laying the foundation for a more stable, resilient financial system capable of driving sustainable economic growth.
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