Hot SourceSource:dailyguidenetwork
Loan defaulters could soon be banned for five years from accessing credit from other financial institutions as part of measures by the Bank of Ghana (BoG) to reduce Non- Performing Loans (NPL’s).
Governor of the Bank of Ghana (BoG), Johnson Asiama, who disclosed this to Heads of Banks at a post Monetary Policy meeting said the directive when implemented will help reduce risks to the profitability, liquidity, and solvency that sometimes characterises the banking sector.
He said, “All banks will be required to identify and take firm action against deliberate defaulters to ensure that credit obligations are honored. A new Credit Risk Management Directive, aligned with Basel principles, will set minimum standards for underwriting, monitoring, and provisioning”.
The new Bank of Ghana directive also requires commercial banks and other regulated lenders to publish the names of such defaulters twice a year, on June 30 and December 31, in at least two national daily newspapers and on their websites in a prescribed format in addition to the five-year ban.
According to the Governor, the Central Bank soon will introduce a Bancassurance directive to strengthen governance in bancassurance arrangements, a Large Exposures Directive to limit concentration risk, and new guidelines on credit concentration to encourage greater diversification across loan portfolios.
He said the Liquidity and Capital Resilience directive yet to be rolled out mandates banks to hold sufficient high quality liquid assets to cover 30-day stress scenarios as well as close loopholes that have allowed the artificial reduction of reserve requirements including the misclassification of deposits.
“We will also introduce a framework for managing interest rate risk in the banking book, strengthen capital planning through the Internal Capital Adequacy Assessment Process, and embed more robust stress testing to ensure early detection of vulnerabilities,” he said.
Asiama further mentioned that BoG will also tighten enforcement of the Foreign Exchange Act and the Guidelines for Inward Remittance Services to prevent the use of unapproved channels for remittance terminations while all banks and payment service providers will submit weekly inward remittance reports detailing transactions and FX credits to Nostro accounts.
He stated, “No FX swaps within remittance operations, no remittance terminations without Bank of Ghana approval, and no application of unprescribed FX rates. Failure to do so will attract sanctions under the Payment Systems and Services Act and the Banks and Specialized Deposit-Taking Institutions Act”.
Asiama further mentioned that the measures which form a single, coherent regulatory framework would not only enforce compliance with existing rules but also positions Ghana’s banking sector to withstand future shocks, compete globally, and play a stronger role in supporting sustainable economic growth.
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