BoG institutes measures to streamline banking operations

The Bank of Ghana (BoG) has announced five new regulatory measures to streamline the operations of banking institutions in the country. 

The measures are a cash reserve ratio (CRR) directive which would maintain domestic currency reserve for the cedi and foreign currency reserve for deposits in foreign currency deposits; guidelines to sanitise the digital lending space, and consumer protection and fair pricing rules to, for instance, stop banks from the imposition of interest charges on inactive accounts.

Others are caps on non-performing loans (NPLs) to restore credit discipline, strengthening local governance and decision-making to reinforce local accountability and board independence in foreign-owned banks operating in Ghana.

Some of the measures, including CRR, are scheduled to take effect from tomorrow, June 5, 2025.

The regulatory measures reflect ongoing consultations with banks and are aligned with the BoG’s broader objectives of ensuring financial stability, promoting fairness and reinforcing market discipline.

The Governor of BoG, Dr Johnson Pandit Asiama, who made this known at a meeting with heads of banks in Accra yesterday, said the integrity and resilience of the country’s financial system hinged on transparent and accountable institutions.

Directive

Dr Asiama said that all banks were now required to maintain domestic currency reserves for cedi deposits and foreign currency reserves for deposits held in foreign currencies.

He said the approach would help to better align liquidity management with funding structures and enhance discipline in the foreign exchange market.

“We trust the transition will proceed smoothly, and we welcome any operational feedback as implementation begins,” the Governor added.

He further said that the bank had observed a growing trend in the application of optional issuer fees (OIFs) on cross currency card transactions.

“In principle, we recognise that these fees may reflect real costs. However, opaque pricing and limited disclosure have already begun to erode consumer trust and the integrity of payment systems.

“To that end, the BoG will soon issue a directive that caps optional issuer fees on cross-currency card transactions at two per cent, and will require the mandatory disclosure of all applicable OIFs to customers before a transaction is completed,” Dr Asiama said.

He said the central bank had received reports that some banks continued to apply interest charges on credit accounts that remained inactive, resulting in cases where the accrued interest exceeds the original principal.

“Let me be clear - such practices are unacceptable.

They distort customer outcomes, misrepresent the true profitability of lending portfolios, and violate the principles of fair treatment and transparency.

“We expect all banks to review their pricing models and ensure that customer charges reflect ethical and commercially defensible standards,” the Governor said.

Digital lending guidelines

Dr Asiama also said that the bank was finalising a comprehensive digital lending guidelines to be issued by August, 2025.

“Today, too many citizens, especially young people and informal workers, are being lured by online lending platforms that make bold promises, only to turn around and trap them in cycles of hidden fees, harassment or worse things,” he said.

Dr Asiama said the guidelines would bring clear, enforceable standards to both bank-led and non-bank digital lending models.

It would also set rules around licensing and authorisation, disclosure and interest rate transparency, data protection and customer privacy, and ethical recovery and collection practices.

On NPLs, he said, the bank would soon issue a comprehensive directive to tackle persistently high NPLs across regulated financial institutions.

He said the upcoming measures would mandate write-offs of fully provisioned loans with no realistic recovery prospects, excluding related-party exposures.

“It will include capping NPL ratios at 10 per cent of gross loans by December 2026, tighten restructuring rules requiring sustained repayment before reclassification, and enforce timely collateral recovery, especially for overdue loans.

“The directive will also strengthen credit risk governance and require proof of effectiveness, enhance NPL reporting and disclosure, with monthly submissions and public transparency; and restrict further credit to strategic or wilful defaulters and share their identities with key financial sector oversight bodies,” Dr Asiama said.

He said as part of the directive, banks would also be required to disclose blacklisted wilful defaulters in their audited financial statements, along with sectoral breakdowns of NPL exposures. 

Local governance

Dr Asiama further said that the central bank would soon issue a directive to reinforce local accountability and board independence in foreign-owned banks operating in the country.

He said the move was in response to a growing concern, including the outsourcing of major credit and risk decisions to offshore principals, who were not subject to Ghana’s regulatory oversight.

“Let me state clearly: Ghana-based boards must not serve as rubber stamps for instructions issued from offshore,” Dr Asiama said.