- BoG’s Basel-Aligned Directive Seeks to Rewire Credit Culture in Ghanaian Banking
The Bank of Ghana is rolling out a sweeping overhaul of credit risk management that will bring the country’s banking sector closer in line with global Basel Committee standards and, in the process, redefine the balance between growth and prudence in lending.
The centrepiece is a Credit Risk Management Directive that establishes minimum requirements for loan underwriting, portfolio monitoring, and provisioning. It mandates more rigorous borrower due diligence, sector-specific risk limits, and forward-looking provisioning models that anticipate expected credit losses rather than simply reacting to defaults.
“We are moving Ghana’s credit governance architecture into a new era, one that demands discipline, foresight, and board-level accountability,” Governor Dr Johnson P. Asiama said in unveiling the directive when he met the Heads of Banks as part of the After MPC meetings.
The BoG is coupling the new framework with three targeted regulatory instruments:
- Bancassurance Directive – setting risk disclosure and conflict-of-interest rules for banks distributing insurance products.
- Large Exposures Directive – imposing caps on lending to a single borrower or group to prevent contagion risks.
- Credit Concentration Guidelines – introducing diversification thresholds by sector, geography, and product type to spread portfolio risk.
Together, these measures are designed to tackle the “cluster risks” that have historically amplified crises in Ghana’s banking system, where overexposure to a few borrowers, sectors, or instruments can cascade into systemic instability.
“These measures are not designed to stifle lending,” Dr Asiama explained. “They are to ensure that lending is prudent, diversified, and capable of withstanding future shocks.”
With inflation easing, the cedi strengthening, and policy rates falling, the Governor sees an opportunity to shift from crisis management to sustainable expansion.
He said, “We must leverage the stability we enjoy today for growth, but not reckless growth.” “We expect banks to channel credit into productive sectors that create jobs and build resilience, while adhering to the highest risk management standards.”
The Governor of the Bank of Ghana stressed that boards and senior executives will be held directly responsible for portfolio risk profiles. “Governance failures in credit are no longer excusable as operational lapses. They will be treated as strategic failures, with consequences,” he cautioned.
The Governor concluded with a challenge: “This is a chance to build a banking sector that is not just bigger but stronger and more trusted. Those who rise to the occasion will lead Ghana’s next chapter of economic growth.”
For banks, compliance will require overhauling credit appraisal systems, embedding automated monitoring for early warning signals, and investing in credit analytics capabilities. Credit committees will need to adopt stricter approval thresholds, while boards will be expected to review sectoral exposures more frequently and proactively.
The BoG’s approach signals a shift from rule-based compliance to governance-driven culture change. By making boards and senior management explicitly accountable for portfolio composition and risk appetite, the central bank is trying to ensure that credit growth does not come at the expense of systemic stability.
If successful, the reforms could lay the foundation for a more diversified, resilient banking sector capable of financing Ghana’s economic ambitions without repeating the excesses of the past decade. But the road there will require investment in systems, people, and perhaps most importantly, a cultural shift in how credit risk is understood and managed.
Investor Bulletin – Credit Risk & Governance
Basel-aligned Credit Risk Management Directive to tighten underwriting, monitoring, and provisioning standards.
New Bancassurance Directive, Large Exposures Directive, and Credit Concentration Guidelines target portfolio diversification and exposure caps.
Banks must upgrade credit analytics, strengthen early-warning systems, and adjust lending strategies to meet tighter limits.
Regulatory push comes amid macro stability, signalling a shift from defence to prudent growth in credit to productive sectors.
