The Bank of Ghana (BoG) has urged banks to continue providing credit to viable businesses, especially those in vulnerable sectors, despite the recent increase in interest rates. Dr. BoG Governor This phone call was made by Ernest Addison Asiama on April 9 during a meeting with bank CEOs in Accra. The policy rate was increased to 28.0 percent, which resulted in an increase in borrowing costs, but Dr. Asiama emphasized the significance of providing assistance to productive businesses and mitigating the effects on negatively impacted industries. *Recommendations and Key Concerns:* - *Solvency Issues in Domestically Controlled and State-Owned Banks*: Dr. Due to unclear recapitalization plans, Asiama expressed concerns regarding the financial health of some domestically controlled and state-owned banks. For maintaining financial stability, it is essential to address these capital deficiencies. *Rising Non-Performing Loan (NPL) Ratio*: In February 2025, the NPL ratio reached 22.57 percent, primarily as a result of inadequate credit risk management and underwriting practices. Dr. In order to lessen the likelihood of additional defaults, Asiama urged banks to strengthen internal controls, such as loan monitoring and early warning systems. - Credit Provision: In spite of the difficulties, Dr. Asiama emphasized the significance of banks continuing to offer credit to thriving businesses, particularly those in vulnerable industries. The growth and stability of the economy depend on this support. *Performance of the Banking Sector:* The profitability of the banking industry as a whole has not changed, but some institutions face difficulties. According to the BoG's monetary policy report, interest rates have generally trended downwards with easing monetary policy and improved liquidity conditions. On the other hand, the current focus is on avoiding the effects of rising interest rates and maintaining financial stability 1. *Way Forward:*
To address these challenges, banks should prioritize:
- *Internal Control Systems*: Strengthening internal controls, including loan monitoring and early warning systems.
- *Recapitalization Plans*: Developing clear recapitalization plans to address solvency issues and ensure financial stability.
The banking industry in Ghana is able to maintain stability and continue to support economic growth by addressing these concerns and putting these measures into action.
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