The Bank of Ghana (BoG) is laying the groundwork for banks to resume lending to financially distressed but viable businesses under a stricter restructuring framework, a move that could expand credit to struggling companies while preserving financial stability as lenders work to reduce bad loans.
Speaking at a forum organised jointly with the Chartered Institute of Restructuring and Insolvency Practitioners (CIRIP) Ghana, Governor of the BoG, Dr. Johnson Pandit Asiama, said the central bank wants to develop clear rules governing post-commencement financing under Ghana’s Corporate Insolvency and Restructuring Act, 2020 (Act 1015).
The initiative comes as Ghana’s banking sector emerges from a period of elevated credit risk. According to the governor, the industry’s non-performing loan (NPL) ratio declined to 16.1% in June 2026 from 23.1% a year earlier, while the capital adequacy ratio improved to 20.4%, giving banks greater capacity to support productive lending.
However, the central bank says the improvement is not enough.
“Our regulatory measures require each regulated institution to reduce its ratio to no more than 10 per cent by the end of December 2026,” Asiama said, adding that banks must strengthen credit appraisal, recovery efforts, and write off fully provisioned loans with no realistic prospect of recovery.
The proposal seeks to address a long-standing gap in Ghana’s insolvency regime. Although Act 1015 gives legal priority to lenders that provide fresh financing to companies undergoing administration, banks have generally remained reluctant to advance new funds because of uncertainty over repayment prospects, risk classification and regulatory treatment.
Instead of encouraging blanket lending to troubled firms, the governor argued that new financing should only be available to businesses with credible restructuring plans and demonstrable commercial viability.
“A business may be distressed without being fundamentally unviable,” Asiama said. “The first question is whether new money can reasonably restore the business to sustainable operations.”
He cautioned that statutory priority alone does not make lending prudent.
“Calling an exposure post-commencement financing cannot convert a weak loan into a good one,” he said, stressing that existing impaired loans must continue to be recognised under International Financial Reporting Standard (IFRS) 9 and prudential regulations.
The framework under discussion would require banks to ring-fence new facilities, channel funds directly to approved suppliers where necessary, monitor proceeds through controlled accounts and establish measurable milestones and exit triggers before additional financing is provided.
The proposal could have significant implications for Ghana’s corporate sector, particularly manufacturers, exporters, construction companies and other businesses that experience temporary liquidity pressures but retain viable operations.
Industry leaders have long argued that viable firms entering administration often fail because they lose access to working capital before restructuring plans can take effect. A functioning rescue financing market could preserve productive assets, safeguard jobs and improve creditor recoveries while reducing unnecessary liquidations.
For banks, however, the challenge remains balancing recovery opportunities against the need to protect depositors and preserve asset quality.
High NPLs continue to constrain credit creation by tying up regulatory capital and increasing provisioning costs. Asiama noted that elevated bad loans “tie up capital, raise recovery costs and restrict new credit, most severely for smaller and higher-risk borrowers,” making their reduction “part of Ghana’s development agenda.”
The Bank of Ghana has recently intensified supervisory measures requiring lenders with elevated NPLs to submit board-approved reduction plans and strengthen loan recovery processes, consistent with commitments made under Ghana’s IMF-supported economic reform programme.
To translate the insolvency law into practical banking operations, the central bank is working with CIRIP Ghana, the Ghana Association of Banks, the Institute of Chartered Accountants Ghana and other stakeholders to develop a common operational framework.
Among the questions under consideration are who should independently assess whether a distressed company remains commercially viable, how rescue financing should be structured and monitored, how new lending should be treated under IFRS 9, and how risks should be shared among lenders, insolvency practitioners, shareholders and existing creditors.
“Our objective is not a system that avoids risk,” Asiama said. “It is a system that understands risk, prices it properly, manages it actively and holds the capacity to absorb losses when judgement proves wrong.”
Businesses and investors will look for whether the proposed framework is translated into formal regulatory guidance that gives banks greater confidence to finance corporate restructurings without weakening prudential standards.
Successful implementation of the framework could deepen Ghana’s business rescue regime, improve credit allocation, preserve commercially viable companies and reinforce the Bank of Ghana’s efforts to restore healthier bank balance sheets
