When commercial banks in Ghana extend credit to drive economic growth, they anticipate a swift and predictable legal system to enforce contracts and recover assets when borrowers fail to pay.
However, in Ghana, bottlenecks in the judicial system have transformed routine debt recovery into a grueling multi-year ordeal.
In a comprehensive review of asset quality in the Ghanaian banking industry, financial and banking consultant Dr. Richmond Atuahene reveals a troubling reality that severe court delays and legislative loopholes maybe effectively shielding “willful” loan defaulters.
This he observes is fueling an industry-wide Non-Performing Loan (NPL) ratio that stood at 18.90% at the end of December 2025.
The 3-to-7-Year Bottleneck and Severe Court Congestion
A central finding in Dr. Atuahene’s study is that credit recovery lawsuits in Ghana routinely drag on in court for three to seven years before a final judgment is rendered. Commercial courts, originally established to expedite financial disputes, are severely overwhelmed by mounting case backlogs.
Strategic defaulters actively exploit this legal gridlock through dilatory defense tactics, seeking persistent court adjournments and hiding behind procedural technicalities.
For commercial banks, every year a loan case sits idle in court translates into mounting legal expenses, locked-up liquidity, and mandatory loan-loss provisions that directly erode bank capital reserves and shrink net earnings.
The Act 1052 Loophole and Weak Collateral Realization
While the Borrowers and Lenders Act, 2020 (Act 1052) established the Bank of Ghana’s Collateral Registry to streamline asset registration and searches, Dr. Atuahene highlights a critical legislative defect.
He notes that Act 1052 does not grant lenders the legal right to dispose of pledged collateral without a court order.
Because banks cannot liquidate mortgaged assets independently, they are forced to execute foreclosures through an overburdened court system. Willful defaulters capitalize on this legal bottleneck by filing for repeated court injunctions that halt asset auctions indefinitely.
Even after obtaining favorable judgments, administrative bureaucracy and legal interference often prevent banks from liquidating seized assets, leaving toxic debts unresolved on bank balance sheets.
Perceived Judicial Bias and the Call for Specialized Financial Tribunals
The study also identifies a key structural deficit in judicial domain expertise. Many general court judges handling complex commercial credit disputes lack specialized training in modern banking law, financial instruments, and collateral valuation.
Furthermore, Dr. Atuahene notes a growing perception among financial institutions that courts frequently exhibit undue sympathy toward defaulting borrowers, particularly those with political or social influence, overriding commercial fairness.
To break this cycle and unfreeze trapped capital, Dr. Atuahene recommends a decisive institutional intervention.
He urges the Office of the Attorney-General and Ministry of Justice, in partnership with the Chief Justice and the Bank of Ghana, to establish specialized financial and commercial tribunals.
Staffed by jurists and domain experts in banking law and forensic accounting, these dedicated benches would bypass general court backlogs, curtail dilatory defense tactics, accelerate security enforcement, and restore credit discipline across Ghana’s economy.
