The Bank of Ghana (BoG) has instructed regulated financial institutions to reduce their Non-Performing Loan (NPL) ratios to below 10 per cent by December 2026 as part of efforts to improve the stability of the banking sector and enhance access to credit.
BoG Governor, Dr. Johnson Pandit Asiama, said although banks have made significant progress in reducing bad loans, the current level remains a challenge and continues to restrict the ability of financial institutions to provide more credit to businesses and households.
Speaking at a forum on “Restructuring Distressed Companies: Non-Performing Loans (NPLs) and Post-Commencement Financing,” Dr. Asiama revealed that the industry’s NPL ratio declined to 16.1 per cent in June 2026, from 23.1 per cent recorded in June 2025.
He, however, cautioned that the improvement was not enough, stressing the need for further measures to address the remaining challenges.
According to him, all regulated institutions are expected to achieve an NPL ratio of no more than 10 per cent by the end of December 2026 through improved credit assessment processes, effective loan recovery strategies, credible NPL reduction plans and the removal of fully provisioned loans with no realistic chance of recovery.
Dr. Asiama explained that high levels of non-performing loans have broader economic consequences because they lock up bank capital, increase recovery costs and reduce the availability of financing, especially for small and high-risk businesses.
“Reducing them is therefore not merely a supervisory concern. It is part of Ghana’s development agenda,” he said.
Meanwhile, Ghana’s banking sector recorded improved performance in the first half of 2026, with total industry assets increasing by 30.7 per cent year-on-year to GH¢502.4 billion in June 2026.
The sector’s Capital Adequacy Ratio (CAR) also strengthened significantly, rising to 20.4 per cent from 10.6 per cent in June 2025, giving banks a stronger financial buffer to withstand shocks and support lending activities.
Source: citinews
