Editorial: Central bank expands supervisory focus

The central bank will soon issue a directive to ensure that boards and management teams based in Ghana retain “genuine authority” over all material credit and risk decisions.

This move is a direct response to the growing trend of key lending and risk assessments being outsourced to offshore principals beyond the scope of Ghana’s supervisory authority.

 Bank of Ghana Governor Dr. Johnson Pandit Asiama indicated this at a post-Monetary Policy Committee (MPC) meeting with bank chief executives in Accra on Tuesday, adding that Ghana-based boards must not serve as rubber-stamps for instructions issued from offshore.

“This undermines the very basis of effective governance and creates unacceptable regulatory blindspots.”

Under the directive, any delegation of decision-making authority to foreign entities will require prior approval from the central bank.

Banks that fail to ensure proper local deliberation before ratifying key decisions may be deemed in breach of Ghana’s Corporate Governance Directive and could face regulatory sanctions.

The Bank of Ghana’s measures are aimed at restoring local decision-making authority in foreign-owned banks, addressing rising concerns over asset quality and tightening consumer protection in the digital financial services space.

Dr. Asiama added further that the integrity of Ghana’s financial system depends on institutions that are locally accountable and governed in the public interest.

In also tightening regulatory oversight, the central bank is addressing other lingering vulnerabilities in the banking sector – particularly in relation to non-performing loans (NPLs). A comprehensive directive will soon be issued to address Ghana’s persistently high NPL ratios, the Governor stated.

The new regime will impose a hard cap on NPLs, limiting them to 10 percent of gross loans by December 2026.

The Bank of Ghana also raised concerns over opaque fee structures that undermine public trust in the banking and payments system. Dr. Asiama criticised the practice of applying interest charges to inactive credit accounts, which in some cases result in interest liabilities exceeding the original loan principal.

Also anticipated is the Bank of Ghana’s long-awaited digital lending guidelines. This move is intended to stem the proliferation of predatory online lenders exploiting unregulated gaps in the digital finance ecosystem.

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