Central bank has ordered commercial banks to accelerate efforts to reduce bad loans, warning that although the banking sector is recovering, the level of non-performing loans (NPLs) remains too high to support sustainable economic growth.
Speaking at the Bank of Ghana and Chartered Institute of Restructuring and Insolvency Practitioners (CIRIP) Ghana Forum on Non-Performing Loans and Post-Commencement Financing in Accra on Tuesday, Bank of Ghana Governor Dr. Johnson Pandit Asiama said lenders had made significant progress over the past year but must do more to improve the quality of their loan books.
According to the Governor, the industry’s non-performing loan ratio fell to 16.1% in June 2026, down from 23.1% a year earlier, while banks remain well-capitalised with a Capital Adequacy Ratio of 20.4%.
“We can have this conversation now, because the banking sector is in a stronger position than it was. The industry’s Non-Performing Loan ratio declined to 16.1 per cent in June 2026 from 23.1 per cent a year earlier, while the Capital Adequacy Ratio stood at 20.4 per cent.”
Despite the improvement, Dr. Asiama said the current level of bad loans remains unacceptable and has instructed all regulated financial institutions to bring their NPL ratios down to no more than 10% by the end of the year.
“But that is progress, not sufficiency, and 16.1 per cent remains too high. Our regulatory measures require each regulated institution to reduce its ratio to no more than 10 per cent by the end of December 2026, alongside stronger credit appraisal, Board-approved reduction plans, effective recovery functions and the write-off of fully provisioned exposures with no realistic prospect of recovery.”
The Governor said reducing bad loans is not only a regulatory priority but also an economic necessity, arguing that high levels of impaired loans continue to weaken banks’ ability to finance businesses and households.
“High non-performing loans tie up capital, raise recovery costs and restrict new credit, most severely for smaller and higher-risk borrowers. Reducing them is therefore not merely a supervisory concern; it is part of Ghana’s development agenda.”
Dr. Asiama urged banks to strengthen credit assessment processes, improve loan recovery mechanisms and implement board-approved strategies to clean up their balance sheets, saying a healthier banking sector is critical to expanding credit and supporting economic activity.
