The Banking Sector Report released by the Bank of Ghana indicates that the total value of Non-Performing Loans (NPLs) has reduced considerably to about GH¢7 billion by end of June this year.
The figure stood at 23.5 percent in April 2018 but saw a sharp decline to 18.9 percent in April 2019. Even though there is some improvement, the current ratio still remains very high and is a source of concern for the industry’s asset quality.
The drop in the Non-Performing Loans is largely as a results of the exercise carried out by the Bank of Ghana to clean up the financial sector and ensure sanity in the banking industry. There are deliberate actions to curtail and clampdown on bad loans to further reduce the industry NPL.
According to the Central Bank, the decline in the NPL signals a slowdown in deterioration of loans across all banks. Credit can be given to improved corporate governance structures as introduced by the Regulator.
Our checks further indicate that, effective credit portfolio analysis and monitoring, to a large extent, also contributed to the reduction in bad loans.
It is however, interesting to note that, despite all the efforts by the BoG to clean-up the banking sector, some unscrupulous customers have resolved to borrow from banks for personal use but with criminal intent of not paying back.
Investigations indicate that some customers are deliberately defaulting in the repayment of their personal loans with some Commercial Banks, Savings & Loans and Rural Banks. These customers allegedly fake letterheads of these financial institutions and are able to move their salaries from their existing creditor banks to other banks in order to avoid the repayment for their loans to be deducted.
Industry-wide investigations also confirmed that the situation is prevalent in at least 6 Commercial banks and some Savings & Loans as well as Community & Rural Banks. These unpaid loans become a blot on the balance sheet of the banks.
Some of the affected banks, we are informed, are collaborating with each other, the Ghana Police Service and the Controller and Accountant General’s Department to fish out these miscreants. We are reliably informed that the police recently invited some defaulting loan customers of the Bank of Africa, in the Suame enclave of the Ashanti Region, for questioning.
Officials of the Bank when contacted declined to comment on the development. However, a source who prefers to remain anonymous, corroborated the findings, stating that some personal loan defaulters have been invited by the police for interrogation. Their statements have been taken and the necessary criminal action will be taken against them in due course.