- BoG Gives Savings and Loans Firms December Deadline to Cut Bad Loans Below 10%
The Bank of Ghana has directed regulated financial institutions to reduce their non-performing loan ratios to no more than 10 per cent by the end of December 2026, intensifying pressure on savings and loans companies whose bad-loan ratio has deteriorated sharply.
Second Deputy Governor Matilda Asante-Asiedu said the non-performing loan ratio within the savings and loans subsector increased from 15.35 per cent in July 2025 to 19.44 per cent in July 2026.
The deterioration contrasts with the broader banking industry, where the ratio declined from more than 23 per cent a year earlier to 16.1 per cent at the end of June 2026.
Speaking at the inauguration of Advans Ghana’s new head office in Accra, Mrs Asante-Asiedu said savings and loans companies had considerable work to do during the final quarter of the year to meet the central bank’s regulatory target.
“We expect regulated institutions to bring their NPL ratio to no more than 10 per cent by the end of December 2026,” she said.
“For the Savings and Loans sub-sector, the NPL deteriorated from 15.35 per cent in July 2025 to 19.44 per cent in July 2026. So, there’s some real work to be done in this last quarter to bring this in line with the regulatory expectation.”
The figures mean that almost GH¢1 in every GH¢5 of loans within the savings and loans subsector was classified as non-performing in July.
The deterioration presents a challenge for institutions expected to expand credit to micro, small and medium-sized enterprises, women, young entrepreneurs and low-income customers who are often underserved by conventional banks.
Savings and loans companies play an important role in extending formal financial services to customers without the income records, collateral or credit profiles commonly required by commercial banks.
However, elevated bad loans can weaken their capital, reduce liquidity and limit their ability to provide additional credit. Institutions may also respond by increasing lending rates or tightening approval requirements, potentially excluding the same customers that the sector is expected to support.
Mrs Asante-Asiedu said financial inclusion initiatives must be built on sound credit underwriting and effective risk management.
The Bank of Ghana’s 2025 Notice on Non-Performing Loans sets supervisory expectations for credit-risk governance, establishes prudential limits on NPL ratios and outlines remedial measures for dealing with wilful defaulters.
The central bank is also preparing a separate directive on credit-risk management.
According to the Second Deputy Governor, the proposed directive will require regulated financial institutions to establish robust credit-risk environments, improve credit-underwriting procedures and maintain appropriate systems for loan administration, measurement, monitoring and recovery.
The directive is expected to strengthen how lenders assess customers before granting loans and how they respond when repayments begin to deteriorate.
The policy intervention comes as the central bank seeks to balance two competing objectives: encouraging financial institutions to lend more to underserved customers while preventing another accumulation of weak loans that could threaten depositor funds and financial stability.
Mrs Asante-Asiedu encouraged savings and loans companies to design products for young entrepreneurs with viable ideas but limited capital or collateral.
She identified cash-flow-based lending, credit bureau information and guarantee arrangements as tools that could allow lenders to serve such businesses without abandoning prudent risk standards.
“I would like to see tailored financial and non-financial products for young entrepreneurs who have great ideas but no capital or collateral,” she said.
Cash-flow-based lending evaluates a borrower’s ability to repay from the income generated by a business instead of depending mainly on fixed assets such as land and buildings.
This could widen access to finance for small businesses, but its effectiveness will depend on reliable transaction records, accurate borrower information and stronger monitoring by financial institutions.
The central bank’s year-end target appears demanding. Reducing the subsector’s NPL ratio from 19.44 per cent to no more than 10 per cent within the remaining months would require significant loan recoveries, restructuring, write-offs or rapid growth in performing credit.
Lenders must also avoid achieving the target by simply restricting new credit to smaller and less established businesses.
The policy test will therefore be whether savings and loans companies can improve the quality of their loan books while continuing to serve customers who remain outside the traditional banking system.
Mrs Asante-Asiedu said institutions entrusted with advancing financial inclusion must be financially strong enough to sustain that responsibility.
“A sector carrying that responsibility must be strong enough to bear it,” she said.
For savings and loans companies, the final quarter of 2026 will consequently be defined by two demands: extending appropriate credit to underserved businesses and demonstrating that those loans can be originated, monitored and recovered without undermining financial stability.
