The Bank of Ghana (BoG) has directed all regulated financial institutions to reduce their Non-Performing Loan (NPL) ratios to below 10% by December 2026 as part of efforts to strengthen the banking sector and improve access to credit.
BoG Governor Dr. Johnson Pandit Asiama announced the directive while speaking at a forum on “Restructuring Distressed Companies: Non-Performing Loans (NPLs) and Post-Commencement Financing.”
According to Dr. Asiama, although Ghana’s banking sector has made significant progress in reducing bad loans over the past year, the current level remains too high and continues to affect the ability of banks to lend to businesses and households.
He disclosed that the banking industry’s NPL ratio declined to 16.1% in June 2026, down from 23.1% in June 2025, describing the improvement as encouraging but insufficient.
“The industry’s non-performing loan ratio has declined to 16.1% as of the end of June this year, down from over 23% a year ago, while the capital adequacy ratio stood at 20.4%. Capital at that level gives banks the room to take considered risks. But while this represents progress, it is not sufficient,” Dr. Asiama said.
He stated that the central bank now requires every regulated institution to reduce its NPL ratio to no more than 10% before the end of the year through stronger credit assessment, effective loan recovery measures, credible NPL reduction plans and the write-off of fully provisioned loans that have no realistic chance of recovery.
Dr. Asiama explained that high levels of non-performing loans have broader consequences for the economy because they lock up bank capital, increase recovery costs and limit lending, especially to small businesses and borrowers considered high risk.
“High non-performing loans tie up capital. They raise recovery costs and restrict new credits, most severely for smaller and higher-risk borrowers. Reducing them is therefore not merely a supervisory concern. It is part of Ghana’s development agenda,” he added.
The Governor also highlighted improvements in the banking sector’s overall performance. Total industry assets grew by 30.7% year-on-year to GH¢502.4 billion in June 2026, driven by increases in deposits, borrowings and shareholders’ funds.
Meanwhile, the sector’s Capital Adequacy Ratio (CAR) improved significantly from 10.6% in June 2025 to 20.4% in June 2026, providing banks with stronger financial buffers to absorb shocks and support future lending.
The Bank of Ghana believes achieving the new NPL target will further strengthen the resilience of the financial sector while improving credit availability to support economic growth.
