The Bank of Ghana (BoG) has announced plans to issue a Credit Risk Management Directive to address rising non-performing loans (NPLs) in the financial sector. Second Deputy Governor, Mrs Matilda Asante-Asiedu, made this announcement on October 7, at the commissioning of Advans Ghana Savings and Loans' new head office in Accra. The directive aims to strengthen lending practices, improve loan recovery, and reduce the accumulation of bad debts.
The directive will require Regulated Financial Institutions (RFIs) to establish robust credit risk management frameworks covering credit underwriting, loan administration, risk measurement, monitoring, and recovery. This move is in response to the growing pressure on the savings and loan sub-sector to improve its loan portfolios. The BoG expects RFIs to bring their NPL ratios down to no more than 10% by the end of December 2026.
The savings and loan sub-sector's NPL ratio has deteriorated from 15.35% in June 2025 to 19.44% in June 2026, against the industry trend. The banking industry's NPL ratio stood at 16.1% at the end of June 2026, down from over 23% a year earlier. The BoG's 2025 Notice on Non-Performing Loans had already set supervisory expectations for credit risk governance, prudential limits for NPL ratios, and remedial measures for willful defaulters.
The new directive reinforces these measures by requiring stronger credit risk management systems and more effective oversight of lending across the loan cycle. It complements existing regulatory measures to improve asset quality and strengthen the financial system. The directive will also set clear requirements for how institutions assess borrowers, manage credit risk, and monitor loans.
The BoG is also implementing broader reforms to the savings and loans and microfinance sub-sectors. These sub-sectors have extended financial services to young people, women, and micro, small, and medium-sized enterprises (MSMEs), and have supported employment and financed businesses often overlooked by conventional banks. The reforms aim to improve regulatory consistency, reduce opportunities for regulatory arbitrage, and strengthen governance.
Under the reforms, the former Tier 1 to Tier 4 classification will be replaced by four categories: Microfinance Banks, Community Banks, Credit Unions, and Last Mile Providers. Existing savings and loans companies may transition into Microfinance Banks, which will be deposit-taking institutions serving MSMEs, groups, and individuals. Institutions in the same category will be held to the same standards, and boards and management teams will be required to demonstrate the necessary skills, expertise, and ethical standards.
Existing institutions seeking to become Microfinance Banks have until December 31, 2026, to meet the minimum capital requirement of GH¢50 million. New entrants must meet GH¢100 million. The Second Deputy Governor commended Advans Ghana for its commitment to meeting the new capital requirements and encouraged other financial institutions to show similar commitment. She stressed that success depends on collective commitment to compliance, transparency, innovation, and professionalism.
Key points
- The Bank of Ghana to issue a Credit Risk Management Directive
- Savings and loans NPLs rising against the industry trend
- December capital deadline for Microfinance Banks
