As part of the regulatory agenda to tackle rising non-performing loans (NPLs) and shore up Ghana’s financial stability, the Bank of Ghana (BoG) has rolled out an Exposure Draft proposing new regulatory measures across the financial sector.
The draft policy framework, which is open to stakeholder and public feedback, outlines far-reaching directives for banks, specialised deposit-taking institutions (SDIs), and non-bank financial institutions (NBFIs) collectively referred to as Regulated Financial Institutions (RFIs).
“The proposed regulations are expected to enhance asset quality, preserve sector profitability, and safeguard financial system stability,” the central bank said.
Stricter Compliance and Credit Risk Controls
Following a comprehensive review of its problem asset framework, the BoG is pressing for tighter credit risk management among RFIs, citing increasing exposure to bad loans that threaten solvency and liquidity.
Under the proposed rules, RFIs must strictly maintain NPL ratios below 10%, establish and uphold robust credit risk management systems, write off all fully provisioned and unrecoverable loans, restructure loans for distressed but viable borrowers, promptly initiate collateral recovery procedures on written-off debts, and crackdown on wilful default and fresh lending restrictions.
In a bid to enhance credit discipline, the BoG is also introducing aggressive measures to clamp down on wilful loan default.
“RFIs must submit lists of loan defaulters whose debts have been written off to both the BoG’s Financial Stability Department and all credit reference bureaus,” the document states.
Notably, defaulters, whether written off or not, must be reported to credit bureaus. Institutions will be barred from issuing new loans to individuals or businesses deemed Wilful Defaulters, unless the default was caused by a verified natural disaster or disability.
In a sharp escalation of transparency, RFIs will also be required to;
Publicly disclose the identities of Wilful Defaulters in at least two national newspapers and on their websites;
Disqualify such defaulters from accessing new credit across the sector, subject to the BoG’s approval.
Repeat offenders, those listed on two or more occasions, will face a five-year credit ban, or longer, depending on the circumstances.
Director Accountability and Corporate Responsibility
Company directors found complicit in fraudulent activities or financial misreporting will also face tough penalties, including a ban from credit access, mirroring the duration of their entity’s default.
These proposed actions are backed by the BoG’s regulatory powers under the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930) and the Non-Bank Financial Institutions Act, 2008 (Act 774).
BoG Calls for Stakeholder Input
The Bank of Ghana is inviting written comments from the financial industry, business groups, and the public as it finalizes the framework.
“This Exposure Draft demonstrates our commitment to collaborative regulatory development and enhanced credit governance,” the central bank said.
