From 1 July 2027, the Bank of Ghana will roll out a new Credit Risk Management Directive that applies to all banks, savings and loans, finance houses and financial holding firms in the country. The directive seeks to bolster the resilience of regulated financial institutions (RFIs) by mandating the establishment and full implementation of robust credit risk management systems that match the institutions’ risk‑taking activities and capital strength.
Under the directive, RFIs must develop a comprehensive credit risk framework, creating an appropriate credit risk environment and aligning their practices with the new requirements. The Bank will assess the quality of each RFI’s credit risk management, applying a principle of proportionality that considers the institution’s profile, systemic importance, market and macroeconomic conditions, and the scale and complexity of its operations.
The Board of each RFI will hold ultimate responsibility for the credit risk it assumes and for ensuring the credit risk management framework remains effective. Boards are required to review and approve the credit risk appetite, strategy, policies, procedures, controls and management information system at least annually or whenever material changes occur.
Senior management will be tasked with implementing the Board‑approved strategy and maintaining policies that cover all credit‑related activities, from origination to monitoring and review. Clear segregation of duties and defined responsibilities for credit assessment, approval and monitoring are also mandatory.
The directive underscores that effective credit risk management is fundamental to the safety and soundness of banks, finance houses, savings and loans, and financial holding companies regulated under the Bank and Specialised Deposit‑Taking Institutions Act, 2016 (Act 930).
Global financial events, such as the 2008‑2009 crisis, and Ghana’s own banking sector clean‑up from 2017‑2019, have highlighted the dangers of weak underwriting standards and inadequate risk governance. RFIs that adopt sound credit risk practices have shown greater financial resilience, a lesson the Bank of Ghana aims to institutionalise through this directive.
Financial institutions should prepare for the implementation by reviewing their credit risk frameworks and ensuring alignment with the new standards. The Bank will monitor compliance closely, with potential penalties for non‑compliance.
