The Bank of Ghana has drawn a clear line in the sand. For too long, the rising tide of Non-Performing Loans (NPLs) has threatened the stability of Ghana’s banking and financial sector, quietly eating away at profitability, liquidity, and even public confidence. On August 13, 2025, the central bank decided that enough was enough.
In its sweeping Notice No. BG/GOV/SEC/2025/23, the BoG announced a decisive overhaul of its policy on problem assets. This is no polite advisory it is an order that will touch every bank, specialised deposit-taking institution, and non-bank financial institution in the country. “The Board of an RFI shall have overall responsibility for approving and periodically reviewing the credit risk management strategy and policies of the RFI,” the notice declared, leaving no doubt that leadership can no longer delegate the heart of risk management to middle management.
At the centre of these reforms lies one unambiguous demand: Ghana’s financial institutions must keep their NPL ratios at or below 10% and microfinance institutions at 5%. The clock is ticking. Full compliance is expected by December 2026. After that, penalties will bite. From January 1, 2027, institutions that cross the limit will face restrictions on paying dividends, awarding bonuses, and even growing loan books in risky sectors. And the punishment will be swift if the NPL ratio is 15% or more, the sanctions hit immediately; if it is between 10% and 15%, the bank has only two years before the squeeze begins.
But this notice does more than set limits—it redefines what must happen when a loan turns sour. Fully provisioned loans, and those with “no realistic prospects of recovery,” must be written off. Yet, as the BoG carefully clarifies, “a write-off shall not mean that the RFI has forfeited the legal right to recover the debt.” Recovery remains an obligation, not a choice. And when the bad debt belongs to a related party be it a director, key management member, or significant shareholder the gloves come off. If such a loan remains unpaid for over 180 days, the individuals involved will be stripped of their positions and may be forced to sell off their stakes to settle the debt.
The rules also make it clear that bad debts will not be quietly swept under the carpet. Twice a year, on June 30 and December 31, RFIs must publish lists of defaulters in at least two national newspapers and on their websites. This public naming and shaming is a deliberate deterrent.
For borrowers who may be struggling but willing to make good on their obligations, the BoG leaves a window open: loan restructuring. RFIs may adjust terms “to enhance the affordability and sustainability of loan repayment,” but these restructured loans will not be reclassified as performing until borrowers have met strict repayment benchmarks.
Perhaps the most unforgiving section of the notice is the one on wilful defaulters. The BoG defines wilful default broadly: refusing to pay despite having the means, diverting funds, presenting falsified collateral, defaulting with multiple institutions, absconding, or disposing of pledged assets without consent. The consequences are severe. Wilful defaulters are banned from accessing credit for a period “twice the period between the date of write-off approval and the date of full settlement.” Those caught twice in ten years will face a minimum five-year credit ban. And directors or guarantors who enable such behaviour will share the same fate.
This is not just a tightening of rules it is a systemic cultural shift. By requiring RFIs with NPL ratios above 7% to file monthly reports, and by demanding that annual reports disclose sectoral NPL data, write-offs, breaches, and recovery rates, the BoG is making transparency a central pillar of banking discipline.
