The Bank of Ghana (BoG) has announced a slight increase in Non-Performing Loans (NPLs). This was revealed in the central bank’s July 2025 Monetary Policy Committee (MPC) Report.

NPLs refer to loans that are in default, typically when borrowers have missed payments for between 90 and 180 days, and they pose significant risks to banks and the wider economy.

According to the MPC report, as of June 2025, NPLs in the banking sector had hit GH¢20.7 billion, representing a 1.3% increase compared to the GH¢20.4 billion recorded the previous year.

NPLs refer to loans that are in default, typically when borrowers have missed payments for between 90 and 180 days, and they pose significant risks to banks and the wider economy.

Despite this marginal increase in the value of NPLs, the data indicate an overall improvement in asset quality across the industry. The NPL ratio, which measures the proportion of total non-performing loans, declined to 23.1% in June 2025 from 24.2% in June 2024. This improvement occurred even as the share of foreign currency-denominated NPLs continued to fall, reflecting a gradual strengthening in loan performance within the sector.

When the fully provisioned loan loss category is adjusted for, the industry’s NPL ratio falls further to 8.5 per cent from 10.8 per cent, reflecting a reduction in sub-standard non-performing loans.

“The decline in the NPL ratio during the period under review is explained by the lower growth in the NPL stock relative to the growth in total loans,” the Bank of Ghana noted.

According to BoG, the sector accounting for the bulk of non-performing loans remains the private sector. The proportion of NPLs attributable to the private sector rose slightly to 96.4 per cent in June 2025 from 95.6% in June 2024, while the public sector share declined to 3.6% from 4.4%.

The commerce and finance, and the agriculture, forestry, and fishing sectors recorded increases in their NPL ratios, while the manufacturing sector’s ratio remained unchanged compared with June 2024.

BoG also reported that the commerce and finance sector recorded the highest level of non-performing loans, with a 7.3% increase in the NPL ratio, in June 2025, compared to 19.7% the same time last year. The services sector followed with an NPL ratio of 25.7%, marking a marginal gain from 26.6% recorded a year earlier.

Industry watchers are expressing concern about the implications of rising NPLs on efforts to lower lending rates. Financial institutions often factor current NPL ratios or borrower payment delays into loan pricing. Some affected businesses told Joy Business they cannot be blamed for delayed loan repayments, citing government payment arrears as a contributing factor.

In August, the Bank of Ghana (BoG) announced a ‘name and shame’ approach to promote responsible borrowing among wilful loan defaulters in a new directive. The financial institution announced this in a formal directive issued to all regulated financial institutions on August 14.

In the new directive, the Bank of Ghana instructed all regulated financial institutions to publish the names of individuals who deliberately refuse to repay loans (wilful loan defaulters), despite having the means, twice a year in national newspapers and on their websites.

“All banks and other regulated lenders will be required to publish the names of such defaulters twice a year, on June 30 and December 31, in at least two national newspapers and on their official websites, using a format provided by the BoG.”

These measures form part of BoG’s latest regulatory actions to curb rising non-performing loans (NPLs) and reduce risks to the profitability, liquidity, and solvency of the banking sector. The central bank has already notified all regulated financial institutions of the directives and published explanatory notes for the public.

Also, not only will the names of the defaulters be published, but they will also be barred from getting any loans from any accredited financial institution for up to about half a decade.

“People in Ghana who deliberately refuse to repay loans... could soon be banned from borrowing from any licensed bank or financial institution for up to five years.” Borrowers who default on more than two occasions will face a five-year credit ban.

“Borrowers listed as wilful defaulters on two or more occasions within ten years will face a mandatory five-year ban, or longer if the calculated prohibition period exceeds that duration,” it added. The restrictions also target directors of companies found to have engaged in fund diversion, misrepresentation, falsified accounts, or fraudulent transactions.

“Directors of companies that are wilful defaulters, where RFIs have identified siphoning/diversion of funds, misrepresentation, falsification of accounts, and fraudulent transactions with the directors’ consent or connivance, shall also be deemed wilful defaulters and prohibited from accessing credit for the same period as the defaulting company,” it said.

Who is a wilful defaulter

According to the Bank of Ghana, “A wilful defaulter is defined as a borrower who deliberately breaks loan agreements... or obtains it through fake documents or false collateral.”

According to the new directive, the BoG outlined the conditions under which an action will be classified as wilful default. BoG explained that a wilful default would be deemed to have occurred if any of the following events were noted:

i. The borrower has defaulted on their repayment obligations to the RFI even when they have the capacity to honour the said obligation;

ii. The borrower has defaulted on their repayment obligations to the RFI and has siphoned or diverted the funds for other purposes;

iii. The borrower has defaulted on their repayment obligations to the RFI and has provided falsified or misrepresented collateral or any other documentation in support of the loan application, thereby securing the facility through fraudulent means;

iv. The borrower has defaulted on their repayment obligations to two (2) or more RFIs concurrently. However, the borrower may be exempted as a wilful defaulter if evidence is provided to the RFI that their inability to meet repayment obligations is due to loss of employment, force majeure, or disability;

v. The borrower has defaulted on their repayment obligations and has relocated without the RFI’s knowledge of the new address; or

vi. The borrower has defaulted on their repayment obligations to the RFI and has, without the RFI’s knowledge or consent, disposed of or removed the movable or immovable assets pledged as security for the facility.