BoG calls on banks to support viable businesses as loan defaults rise

The Bank of Ghana (BoG) has urged banks to continue extending credit to viable businesses, particularly those in vulnerable sectors, despite the impact of rising interest rates. 

Dr Johnson P. Asiama, Governor of the BoG, made the call during the first post-MPC meeting with bank CEOs in Accra on April 9.

He acknowledged that the recent increase in the policy rate to 28.0 percent would raise borrowing costs, but stressed the importance of supporting productive enterprises and finding solutions to reduce the impact on sectors hardest hit by these changes.

Dr Asiama also expressed concerns about the financial health of some domestically controlled and state-owned banks.

While the banking sector overall remains profitable, several of these institutions are grappling with solvency issues, particularly due to unclear plans for recapitalisation.

He emphasised that addressing capital shortfalls in these banks is critical for maintaining financial stability.

The Governor also raised alarms over the rising non-performing loans (NPL) ratio, which reached 22.57 percent as of February 2025.

This increase has been largely attributed to poor underwriting practices and weak credit risk management.

Dr Asiama called on banks to improve their internal controls, including enhancing loan monitoring and early warning systems, to reduce the risk of further defaults.