Ghana’s savings and loans companies are facing mounting pressure to strengthen their financial foundations as the Bank of Ghana (BoG) prepares to introduce a new Credit Risk Management Directive aimed at curbing bad loans and improving lending standards across the financial sector.
The regulatory push comes at a critical time for the savings and loans sub-sector, where the non-performing loan (NPL) ratio climbed to 19.44% in June 2026, reversing the improvement recorded across the broader banking industry.
Alongside the proposed credit risk rules, the central bank is pursuing sweeping reforms that will reshape the microfinance sector, introduce new institutional categories and impose significant capital requirements on businesses seeking to operate as Microfinance Banks.
Existing institutions intending to transition into Microfinance Banks have until December 31, 2026, to meet the minimum capital requirement of GH¢50 million, while new entrants will be required to provide GH¢100 million.
The deadlines place management teams, shareholders and investors under increasing pressure to determine whether their institutions can meet the new standards, pursue mergers or acquisitions, or consider an orderly exit.
BoG Tightens the Screws on Credit Risk Management
Second Deputy Governor of the Bank of Ghana, Mrs Matilda Asante-Asiedu, announced plans for the new directive as the regulator intensifies efforts to improve credit administration, strengthen loan recovery and prevent the accumulation of bad debts.
The directive will require Regulated Financial Institutions (RFIs) to establish comprehensive frameworks covering credit underwriting, loan administration, risk measurement, monitoring and recovery.
Explaining the objective, she said:
“This directive aims to ensure that Regulated Financial Institutions (RFIs) develop and implement appropriate frameworks for managing their credit risk by establishing a robust credit risk environment; a sound credit-underwriting process; and maintaining appropriate credit administration, measurement, monitoring, and recovery processes and functions.”
Mrs Matilda Asante-Asiedu
The proposed rules are expected to strengthen how financial institutions assess borrowers before approving loans and monitor their repayment behaviour after disbursement.
This places greater responsibility on lenders to identify potential defaults early, improve oversight of loan portfolios and implement effective recovery procedures when borrowers fail to meet their obligations.
The directive will reinforce existing supervisory measures, including the BoG’s 2025 Notice on Non-Performing Loans, which established expectations for credit risk governance, prudential limits and remedial action against willful defaulters.
Savings and Loans NPLs Climb to 19.44%
The urgency behind the regulatory intervention becomes more apparent when the performance of savings and loans companies is compared with developments across the banking industry.
According to Mrs Asante-Asiedu, the banking industry’s NPL ratio declined to 16.1% at the end of June 2026 from more than 23% a year earlier. The savings and loans sub-sector, however, recorded a deterioration, with its ratio increasing from 15.35% in June 2025 to 19.44% in June 2026.
That divergence presents a challenge for institutions expected to improve asset quality while maintaining their role in extending credit to underserved customers and businesses.
The BoG expects regulated institutions to reduce their NPL ratios to no more than 10% by the end of December 2026.
“The banking industry’s ratio stood at 16.1 per cent at end-June 2026, down from over 23 per cent a year earlier. However, for the Savings and Loans sub-sector, the NPL deteriorated from 15.35% in June 2025 to 19.44% for the same period in 2026. So, there is real work ahead of us in this last quarter to bring this in line with the regulatory expectation.”
Mrs Matilda Asante-Asiedu
Meeting that target will require substantial improvements in loan monitoring, repayment enforcement and credit risk assessment within a relatively short period.
High NPL ratios can weaken earnings as lenders set aside provisions against doubtful loans, constrain their ability to extend fresh credit and expose deposit-taking institutions to greater financial pressure.
Four New Categories to Reshape Microfinance
Beyond the credit risk directive, the BoG is preparing to restructure the savings and loans and microfinance sub-sectors through a new classification system.
The existing Tier 1 to Tier 4 framework will be replaced by four categories: Microfinance Banks, Community Banks, Credit Unions and Last Mile Providers.
Under the proposed structure, existing savings and loans companies may transition into Microfinance Banks, which will operate as deposit-taking institutions serving micro, small and medium-sized enterprises (MSMEs), groups and individuals.
The reforms are intended to improve regulatory consistency, strengthen governance and reduce opportunities for regulatory arbitrage.
Institutions operating within the same category will be subject to the same standards, while boards and management teams will be expected to demonstrate the required expertise, professional competence and ethical standards.
The changes could also reshape competition within a segment that has played an important role in extending financial services to women, young people and smaller businesses often overlooked by conventional banks.
Mrs Asante-Asiedu said the reforms are designed to rebuild public confidence, deepen financial inclusion, attract investment and strengthen local participation and ownership.
GH¢50m Deadline Raises Stakes for Existing Firms
The December 31, 2026, capital deadline is emerging as a defining test for institutions seeking to transition into Microfinance Banks.
Existing institutions must meet the minimum capital requirement of GH¢50 million, while businesses entering the market as new Microfinance Banks must satisfy a higher threshold of GH¢100 million.
Institutions unable to meet the requirements independently have several options. They may merge with or be acquired by another institution, transfer their assets and liabilities to a qualified institution through an orderly process, or exit voluntarily.
These alternatives could encourage consolidation as institutions assess their financial strength, shareholder support and long-term viability.
Mrs Asante-Asiedu commended Advans Ghana for its commitment to meeting the new capital requirements and praised the Advans Group for supporting its Ghanaian subsidiary.
“We encourage other foreign shareholders to show a similar level of commitment to support their Ghanaian subsidiaries as all institutions work towards the end-of-year deadlines, for capital and for non-performing loans alike.”
Mrs Matilda Asante-Asiedu
A Defining Test for Ghana’s Microfinance Sector
The success of the reforms will depend on more than meeting capital thresholds and issuing new directives. Financial institutions must also demonstrate that they can manage credit responsibly, protect depositors and sustain lending to the businesses and households that depend on them.
The BoG is calling on financial institutions, government agencies, development partners and customers to support the reform process through compliance, transparency, innovation and professionalism.
As the December deadline approaches, institutions face two pressing obligations: strengthen their capital positions and bring bad loans under control.
The Deputy Governor summed up the objective of the exercise by stating:
“The aim is a sector in which every institution is strong enough to protect its depositors and keep serving its clients.”
Mrs Matilda Asante-Asiedu
The coming months will test whether the sector can meet those expectations while preserving its contribution to financial inclusion and business development.
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