Bank of Ghana proposes income-based rules for loan assessments

The Bank of Ghana has unveiled a draft Credit Risk Management Directive, 2026, which aims to transform how financial institutions evaluate creditworthiness. The proposed rules require lenders to prioritize a borrower's income and cash flows over the value of their collateral when making lending decisions. This shift is intended to improve the accuracy of credit assessments across the banking sector and facilitate the earlier identification of potential problem loans.

According to the draft directive, banks will be expected to implement more stringent verification processes. This includes a thorough analysis of a borrower's income stability, a review of their past repayment behavior, and a "stress test" of their financial capacity against adverse economic shifts. While collateral will still be used to mitigate risk, the Bank of Ghana insists that asset values should not be the primary justification for extending credit. This approach seeks to ensure that loans are granted to individuals and businesses with the genuine capacity to service their debt, rather than those who simply possess high-value assets.

Stakeholders in the financial sector have until November 30, 2026, to submit their comments and suggestions on the draft proposal. The Bank of Ghana has set a deadline of June 30, 2027, for all commercial banks to align their internal credit policies and risk management frameworks with the new standards. The directive is officially scheduled for implementation on July 1, 2027, as part of a broader effort to strengthen the resilience of Ghana's financial system.