BoG to issue new Credit Risk Directive as NPL ratio in the Savings and Loans sector deteriorates

The Bank of Ghana (BoG) intends to issue a Credit Risk Management Directive to bolster lending practices and tackle an increase in non-performing loans (NPLs) within the Savings and Loans sector. This directive was announced by Second Deputy Governor Matilda Asante-Asiedu on Wednesday, October 7, during the grand opening of Advans Ghana Savings and Loans' new headquarters in Dzorwulu, Accra.

The directive seeks to obligate Regulated Financial Institutions (RFIs) to establish robust credit risk management systems, encompassing credit underwriting, loan administration, risk measurement, monitoring, and recovery. The primary goals of this directive are to establish a robust credit risk environment, maintain a sound credit-underwriting process, and ensure appropriate credit administration, measurement, monitoring, and recovery functions.

Additionally, the directive will impose stringent requirements on how institutions assess borrowers, manage credit risk, and monitor loans to minimize the accumulation of bad debts. The BoG anticipates that RFIs will reduce their NPL ratios to a maximum of 10% by December 2026.

While the industry-wide NPL ratio improved in June 2026 (16.1%) compared to the previous year (23%), the Savings and Loans sub-sector's ratio deteriorated from 15.35% in June 2025 to 19.44% in the same period of 2026. Asante-Asiedu emphasized the urgent need to address this issue during the final quarter of 2026.

This directive aligns with broader reforms of the savings and loans and microfinance sectors, aimed at expanding financial services to young people, women, and micro, small, and medium-sized enterprises (MSMEs). These sub-sectors have played a vital role in supporting employment and financing businesses that traditional banks often overlook. The BoG is implementing these reforms to ensure the financial sector remains strong and robust enough to bear the responsibility of serving these underserved populations.

As part of these reforms, the BoG plans to replace the former Tier 1 to Tier 4 classification with four new categories: Microfinance Banks, Community Banks, Credit Unions, and Last Mile Providers. Existing savings and loans companies may transition into Microfinance Banks, provided they meet the minimum capital requirement of GH¢50 million by December 31, 2026.

New entrants must meet a higher capital requirement of GH¢100 million. Institutions can meet the capital requirement through various methods, such as merging with or being acquired by another institution, transferring assets and liabilities to a qualified institution, or exiting voluntarily. Mrs. Asante-Asiedu commended Advans Ghana for its commitment to meeting the new capital requirements and applauded the Advans Group for supporting its Ghanaian subsidiary.

The Second Deputy Governor urged financial institutions, government agencies, development partners, and customers to support the reform process, emphasizing the importance of collective commitment to compliance, transparency, innovation, and professionalism. The ultimate goal is to create a financially strong and inclusive sector where every institution is capable of safeguarding its depositors and serving its clients effectively.