Ghana’s banking sector faces a growing challenge as non-performing loan (NPL) ratios continue to rise, threatening financial stability and credit availability. Dr. Johnson Asiamah, Governor of the Bank of Ghana, has called for urgent reforms to address the issue, emphasizing its impact on the economy.- Summary
Ghana’s banking sector faces rising non-performing loan (NPL) ratios, with some banks reporting up to 81% in defaults, threatening financial stability. Bank of Ghana Governor Dr. Johnson Asiamah urges urgent reforms, citing the Domestic Debt Exchange Programme as a key contributor. The central bank plans regulatory interventions to stabilize the sector.
Speaking at the National Economic Dialogue 2025, Dr. Asiamah revealed shocking figures that underscore the severity of the crisis. One local bank has an NPL ratio of 81%, meaning for every GHS 100 lent, GHS 81 remains unpaid. Another local bank records an NPL ratio of 62%, while the highest among foreign banks stands at 21%.
“The banking sector is under immense pressure due to these alarming NPL levels. This situation is not only a burden on banks but also on businesses, as high default rates drive up lending costs, making credit expensive and inaccessible,” Dr. Asiamah warned.
While banks bear some responsibility for loan defaults, the Governor acknowledged that the Domestic Debt Exchange Programme has exacerbated the problem, limiting loan recoveries and straining financial institutions. This has contributed to soaring lending rates, further tightening economic activity.
Dr. Asiamah assured stakeholders that the Bank of Ghana is prepared to take decisive measures.
“We need to find solutions to reduce NPL ratios across banks, particularly local and state-owned banks. Discussions have already started with the Association of Banks, and we are committed to implementing reforms that will stabilize the financial sector,” he stated.
The Bank of Ghana plans to engage industry players in crafting policies that will enhance credit risk management, improve loan recovery processes, and strengthen banking regulations to curb excessive risk-taking.
High NPL ratios have far-reaching economic implications, limiting banks’ ability to lend and increasing borrowing costs for businesses. Addressing this challenge will require stronger corporate governance, improved financial discipline, and proactive regulatory oversight.
Dr. Asiamah reaffirmed the central bank’s commitment to making tough but necessary decisions to stabilize the sector.
“We are resolved to act, and we want the public to understand why certain decisions will be taken,” he concluded.
The industry’s NPL ratio increased to 21.8 percent in December 2024, up from 20.6 percent in December 2023
