BoG backs suit of borrowers by lenders in debt recovery strategies
The Bank of Ghana (BoG) has expressed its approval of the suit of borrowers by lenders as a measure of debt recovery strategies by lenders in the country.
According to the Central Bank, the right of lenders to sue a borrower in the event of a default is in accordance with the lenders’ rights of enforcement under the Borrowers and Lenders Act, 2020 (Act 1052).
Section 61 of Act 1052, the apex bank asserts, sets out the remedies available to a lender in the event if a default by a borrower as follows:
- a lender may sue the borrower on any covenant to perform under the credit agreement.
- where a security interest is registered under Act 1052, a lender may realise the interest in the collateral without initiating proceedings in court;
- a lender may appoint a Receiver or Manager to realise the security interest on behalf of the lender.
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“In view of the above and in line with the mandate of Bank of Ghana to promote and support the development of a fair, transparent, competitive and accessible credit market under Section 76 of Act 1052, as well as to ensure improved disclosure during the lending process, Bank of Ghana here by directs as follows;
“Henceforth all lenders are directed to expressly capture their rights of enforcement pursuant to Section 61 of Act 1052 in their credit and collateral agreements,” the apex stated.
“All lenders are advised to take note of the above and be guided accordingly,” it added.
