BoG Governor tells banks to enhance credit administration to address the increasing non-performing loan ratio.

As part of efforts to address the rising non-performing loan (NPL) ratios, the Governor of the Bank of Ghana (BoG), Dr. Johnson Asiama, has urged commercial banks to strengthen their credit administration systems.

Dr. Asiama noted that soon, banks will need to rely more on the performance of their loan portfolios to sustain returns.

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Speaking at the opening of the 125th Monetary Policy Committee (MPC) meetings, he disclosed that the NPL ratio currently stands at 23.1 percent, a level that requires continuous supervisory attention.

When asked what accounted for the figure and what measures were being taken to address it, Dr. Asiama said:

“We have been actively working to address the issue of high non-performing loans. As I mentioned in my opening remarks, the current level of NPLs remains a concern. In response, we have recently issued new regulatory notices to banks aimed at tackling this challenge. “

He explained that the Bank of Ghana’s goal is not only to reduce NPLs but also to strengthen credit administration frameworks within banks. This, he stressed, is crucial as the economy transitions away from persistently high interest rates.

Currently, he observed, Bank of Ghana bills provide attractive returns, enabling banks to invest and report strong bottom lines. However, he cautioned, this phase is nearing its end.

“Soon, banks will need to rely more heavily on the performance of their loan portfolios to generate returns. This makes it imperative for them to enhance credit administration and reduce NPLs to sustain profitability in the evolving financial landscape,” Dr. Asiama added.