The banks maintained that so far, the remittances of loan deductions to lenders were in arrears for three months, although the CAGD had deducted the amounts from the salaries of public sector workers.

They explained that the proposed action, if implemented, could affect teachers, nurses, doctors and other public sector workers who relied on payroll-based loans to meet personal and household financial needs.

The banks, led by the Ghana Association of Bankers (GAB), insisted that the situation was putting pressure on the lenders, forcing them to absorb avoidable impairments, which could undermine their profitability and ability to extend credit to other economic units.

“And that is why we are likely to, in the coming days, take that very difficult decision to stop all Controller-driven payroll-based lending so that we can also meet the requirement set by the central bank, which is for the banking industry to bring its non-performing loans (NPL) ratio down to 10 per cent.

“One of the steps we are taking is to suspend all lending, or further lending, to public sector workers whose salaries are processed through the Controller and Accountant-General’s Department,” the Chief Executive Officer (CEO) of GAB, John Awuah, told journalists in Accra  after the 43rd annual general meeting (AGM) of the association.

The threat comes nearly two months before the Bank of Ghana’s December 2026 deadline for banks to bring their NPL ratios down to 10 per cent.

The industry’s NPL ratio has, however, been steadily improving, falling from 23.1 per cent in June 2025 to 16.1 per cent in June 2026 and further to 15.7 per cent in August 2026.

Despite the improvement, the latest ratio means that the banking industry remains 5.7 percentage points above the central bank’s 10 per cent target.

The proposed suspension of payroll-based lending is, therefore, one of the measures the banks intend to adopt to limit further deterioration in asset quality and avoid additional impairments as they work towards the December deadline.

Mr Awuah said the banking industry’s ability to reduce its NPL ratio would depend partly on addressing repayment challenges and improving the credit environment.

“We need to work more together to bring the NPLs down,” he said.

Intervention

The CEO stated that the banks were prepared to take the decision about two months ago, but the intervention of the Chief Director of the Ministry of Finance temporarily halted the move. 

He said following the intervention, the CAGD made a payment to the banks for that month, raising hopes that the outstanding remittances would be resolved.

However, Mr Awuah said the problem had resurfaced, with the banks now having to wait for about three months for the remittance of deductions already made from the salaries of public sector workers.

The GAB CEO said the banks had engaged the Controller and Accountant-General, Kwasi Agyei, on the matter, including a telephone discussion as recently as last Wednesday, but the outstanding arrears remain unresolved.

He urged the CAGD to clear the arrears to enable banks to continue providing payroll-based credit and avoid further impairments that could constrain their ability to support households, businesses and the wider economy.

Mr Awuah said the delay in remitting payroll deductions to banks had persisted for more than a decade, with lenders repeatedly having to engage the CAGD before payments were made.

“Delays with regard to CAGD payments have been a problem for years, I would say perhaps more than 10 years.

Every time, we are almost begging on our knees before the Controller makes payment,” he said. 

“They have been paid, which means that they have settled the loan.

So, it is just left with the Controller to also pass on the disbursement that has already been taken from the salaries of public sector workers to the banks,” he added.

The Governor of the Bank of Ghana (BoG), Dr Johnson Pandit Asiama, who was the keynote speaker at the AGM, reminded banks that the December deadline to reduce their NPLs ratios to the prudential limit of 10 per cent was fast approaching.

He reminded banks that they were required to strengthen underwriting standards, credit administration, loan monitoring, restructuring practices, collateral management, write-offs and recovery processes to achieve the target.

Dr Asiama said the BoG’s regulatory approach was shifting from simply provisioning for problem loans to ensuring that banks actively prevented, managed, recovered and resolved non-performing assets.

“Let me use this opportunity to remind all banks of the requirement to reduce their NPL ratios to the prudential limit of 10 per cent by the end of December this year,” he stated.