The Bank of Ghana (BoG) has proposed rules requiring lenders to assess borrowers’ ability to repay loans from income and cash flows, rather than rely on collateral. 

‎The proposal forms part of the draft Credit Risk Management Directive, 2026, which seeks to strengthen credit assessment, loan monitoring and the early identification of problem loans. 

‎Paragraph 53 of the draft states that “collateral shall not be used as a substitute for a comprehensive assessment of repayment capacity.” 

‎The proposed directive covers banks, specialised deposit-taking institutions, non-bank financial institutions and financial holding companies regulated under the relevant laws. 

‎Under the rules, lenders would have to verify borrowers’ income and cash flows, assess repayment history and expenses, and determine their ability to service loans under adverse economic conditions, including rising interest rates and reduced income. 

‎For businesses, assessments would cover historical financial performance, projected cash flows, management expertise, industry conditions, equity contributions and capacity to share risk. Lenders could also use alternative data and analytical tools, provided they were reliable, explainable and proportionate. 

‎The draft retains collateral requirements but mandates prudent policies for its acceptance, valuation and enforceability. Lenders would also have to reassess collateral values regularly and ensure that valuations were independent of credit origination, assessment and approval. 

‎“The valuation of collateral shall reflect fair values, accounting for market liquidity and realisation timeframe” the draft states. 

‎Paragraph 189 further provides that collateral must not determine whether a loan is classified as non-performing 

‎An exposure meeting the relevant criteria must be classified as non-performing even if the value of pledged assets exceeds the overdue amount.‎ 

‎“Collateral and other mitigants may be considered in assessing unlikeliness-to-pay but shall not affect past-due counting or the determination of non-performance,” the document states. 

‎The exposure draft invites stakeholder comments by November 30, 2026. 

‎Regulated institutions would have until June 30, 2027, to align their governance arrangements, policies and processes with the directive, which is scheduled to take effect on July 1, 2027.