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BoG to repeal Borrowers & Lenders law

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By Elorm Desewu

The Bank of Ghana, (BoG) would soon review the Borrowers and Lenders Law  which was passed by Parliament a decade ago to provide the legal framework for credit and sets improved standards of disclosure of information by borrowers and lenders .
Already the central bank has served notices to stakeholders for their inputs on the repeal of the law.
At a stakeholders’ meeting on creating a robust financial sector, the Second Deputy Governor of the Bank of Ghana, Elsie Addo Awadzi disclosed that there are currently discussions on the way forward for the new borrowers and lenders act.
According to the second Deputy Governor of the BoG, “we also hope that banks will do their part so that the entire current infrastructure in place is working well. We are actually proposing a repeal of the Borrowers and Lenders Act and the replacement of the Act. It is early days yet as the law is currently going around the major stakeholders for their inputs,” she stated.
But with the prevailing challenges facing the banking industry, it has become apparent to review aspects of the law to cater for how wrongful loan disbursements could be minimized if not completely eradicated.
The banking sector report for January 2018 showed that the share of non-performing loans of commercial banks increased from GHC6.14 billion to GHC8.58 billion  between December 2016 and the same period in 2017.
This translates into a Non Performing Loan (NPL) ratio of 22.7 percent in December 2017 from 17.3 percent the previous year.

The Bank of Ghana recently re-launched its collateral registry system as part of measures to sanitise the industry. The registry will afford commercial banks real-time information on the risks of any customer they may issue out loans to.

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