The Bank of Ghana (BoG) has announced a robust set of measures to tackle the alarming rate of non-performing loans (NPLs) within Ghana’s financial sector, including a five-year ban on access to credit for wilful loan defaulters.
In a statement issued on June 16, 2025, the central bank said persons identified by Regulated Financial Institutions (RFIs) as deliberately refusing to repay loans despite having the capacity to do so, will face severe penalties aimed at restoring confidence in the banking system and strengthening credit discipline.
Key Sanctions and Directives:
- Five-Year Credit Ban:
Wilful defaulters will be prohibited from accessing new credit facilities from any licensed financial institution in Ghana for a minimum of five years. - Public Naming and Shaming:
Banks and other RFIs are mandated to publish the names of such defaulters in at least two national newspapers and on their respective websites, creating transparency and acting as a deterrent. - Reporting to the Financial Intelligence Centre (FIC):
The identities of wilful defaulters will also be flagged to the FIC, Ghana’s anti-money laundering agency, raising potential risks for their future financial engagements. - Enforcement of Write-Offs:
Financial institutions are required to immediately write off fully provisioned bad loans, ensuring their books accurately reflect their risk exposures. - Stricter Credit Risk Management:
Institutions must now adopt independent credit review mechanisms, establish stronger early recovery processes, and maintain updated credit records on customers. - Insider Loan Disqualification:
Directors and shareholders linked to defaulted insider loans will be disqualified from holding financial sector positions and may be forced to divest their ownership in the institution.
According to the BoG, these measures form part of an ambitious plan to bring down the national Non-Performing Loan ratio to below 10% by December 2026. As of the first quarter of 2025, Ghana’s NPL ratio stood at an estimated 18.3%, posing a threat to banking stability and investor confidence.
The central bank warned that institutions that fail to comply with the new directives risk regulatory sanctions, including restrictions on:
Dividend payments
Loan book growth
Expansion into new business activities
BoG emphasized that “wilful default” refers specifically to borrowers who have the means to repay their loans but deliberately refuse to do so, unlike those who genuinely face financial hardship.
Ghana’s financial sector has undergone significant reforms since the 2017 banking sector cleanup. However, persistent challenges remain, including:
Poor loan recovery rates
Insider abuses and political interference in lending
Weak credit appraisal and monitoring systems
These have contributed to a surge in bad loans and forced the BoG to tighten its regulatory grip. By targeting wilful defaulters, the BoG seeks to instill a culture of responsibility and reduce systemic risk.
Financial analysts have lauded the move as long overdue, noting that chronic loan defaults have weakened several banks and increased the cost of credit for legitimate borrowers.
Meanwhile, consumer advocates have called on banks to also improve loan accessibility, particularly for small businesses and the informal sector, which are often locked out due to rigid credit scoring and lack of collateral.