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Ghana Banks Threaten To Suspend Loans To Public Workers

Ghana Association of Banks threatens to suspend loans to public sector workers over delayed repayments, warning that commercial banks can no longer absorb losses from the Controller and Accountant-General’s Department (CAGD) payroll system. The industry body said banks are awaiting three months of outstanding remittances deducted from salaries but not transferred to lenders.

Speaking at the Association’s 43rd Annual General Meeting in Accra, Chief Executive Officer of the Ghana Association of Banks, John Awuah, said the banking industry could take the step in the coming weeks if the issue is not resolved. “We are now very hard-pressed, and we are likely going to take a very unusual step of suspending lending to all government workers whose salaries are processed through the Controller and Accountant General,” he warned.

He explained that the problem has persisted for more than a decade, with banks struggling to receive money deducted from the salaries of public sector workers to settle their loans. “We cannot continue to do this to the industry where salaries are being paid but our loan repayments are not remitted,” Awuah stressed. According to him, the delays were affecting the banking industry’s ability to manage loan portfolios and could result in avoidable impairments that reduce profits. “We want to see a stronger banking system, but we can’t have a stronger banking system when the profit we make is eaten away by impairments that are completely avoidable.”

The threat comes as Bank of Ghana Governor Dr Johnson Asiamah has ordered banks to reduce their non-performing loan (NPL) ratio to below 10% by next year, or face dividend and bonus bans from January 2027. Ghana’s NPL ratio fell to 15.7% in August 2026 from 20.8% a year earlier, but remains high compared to Togo below 10%, Nigeria below 9% and Côte d’Ivoire below 7%. The Association said the action was supposed to happen three months ago but was paused after intervention by Chief Director of Ministry of Finance.

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Banks said they have begun discussions and in coming weeks will announce total suspension of new salary-backed loans to workers under CAGD. “We shall be forced to do this to save the industry and I can assure you that this time, we shall go ahead. We have had all the discussions and whatever we need to say has been said but still we don’t get the results,” Awuah added. The move would affect teachers, nurses, civil servants and other public sector workers whose loans depend on CAGD payroll deductions, forcing them to seek alternative collateral or microfinance options.

The Association has also been charged to partner Bank of Ghana in developing framework for full implementation of Lenders and Borrowers Act, including publishing names of wilful defaulters twice yearly. BoG says loan defaulters could be barred from accessing credit up to five years. For now, banks warn public sector borrowers to check with their banks on existing deductions while government works to clear arrears owed to banks.

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Author: Stella Sunu • Published on Howedey.com

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