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The Bank of Ghana (BoG) has directed 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.
Governor of the Bank of Ghana, Dr. Johnson Pandit Asiama, said although banks have made significant progress in reducing bad loans, the current level remains a concern and continues to affect the ability of financial institutions to extend 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 banking sector’s NPL ratio declined to 16.1% in June 2026 from 23.1% recorded in June 2025.
He, however, cautioned that the improvement is not enough, stressing that more work is needed to address the challenge of bad loans within the financial sector.
According to him, all regulated financial institutions are expected to meet the target of reducing their NPL ratios to no more than 10% by the end of December 2026 through stronger credit assessment processes, effective loan recovery measures and the write-off of fully provisioned loans with little chance of recovery.
Dr. Asiama explained that high levels of non-performing loans affect the wider economy by locking up bank capital, increasing recovery costs and limiting lending, especially to small and high-risk businesses.
“Reducing non-performing loans is therefore not only a supervisory concern but also an important part of Ghana’s development agenda,” he said.
Meanwhile, Ghana’s banking sector recorded improvements in asset quality during the first half of 2026, with total assets growing by 30.7% year-on-year to GH¢502.4 billion in June 2026.
The sector’s Capital Adequacy Ratio also increased to 20.4% from 10.6% in June 2025, strengthening banks’ ability to absorb shocks and support lending activities.
Story by Efua Nessa