Bank of Ghana Gives Banks Until December to Cut Bad Loans to 10%

The Bank of Ghana has renewed its demand that commercial banks reduce their nonperforming loan (NPL) ratio to 10% by December 2026, as lenders continue efforts to recover outstanding debt and strengthen their balance sheets.

Governor Johnson Pandit Asiama reiterated the deadline on 8 October at the Ghana Association of Banks’ annual general meeting in Accra.

The banking sector’s NPL ratio fell from 20.77% in August 2025 to 15.66% in August 2026, a decline of 5.11 percentage points over 12 months. Banks must cut the ratio by another 5.66 percentage points to meet the central bank’s target.

Despite the improvement, bad loans remain above the regulator’s required level. The Bank of Ghana has urged lenders to strengthen credit risk management and improve debt recovery.

The requirement follows a notice on nonperforming loans issued in August 2025. The framework aims to improve credit risk governance, establish prudential limits and introduce corrective measures for borrowers who fail to meet repayment obligations.

According to the Bank of Ghana’s Financial Stability Review 2024, the NPL ratio rose from 15% of gross bank loans in 2020 to 22% in December 2024. The deterioration put pressure on banks’ profitability and liquidity while increasing risks to financial stability.

Banks Face Pressure to Improve Loan Recovery

The central bank wants lenders to strengthen controls throughout the credit cycle, starting with more thorough borrower assessments before approving loans. Banks must also monitor repayments more closely, restructure debt where appropriate and pursue outstanding amounts more effectively.

The regulator is also developing a directive on credit risk management to provide clearer rules for loan approvals, monitoring, risk assessment and recovery.

These measures form part of efforts to strengthen the banking sector following losses linked to Ghana’s economic crisis and the Domestic Debt Exchange Programme launched in 2022.

Asiama said all 23 banks operating in Ghana now meet regulatory capital requirements. Reducing nonperforming loans is another priority as the sector works to improve its financial position.

Credit Access Remains a Concern

High levels of bad debt tie up bank resources, increase provisioning requirements and limit the funds available for new lending. However, tightening lending conditions too aggressively could make it harder for businesses and households to secure financing.

The Bank of Ghana wants lenders to balance credit growth with stronger risk controls, reducing defaults without restricting lending to productive sectors of the economy.

Progress over the coming months will determine whether Ghana’s banks can meet the 10% nonperforming loan target by December 2026.