The Bank of Ghana has shifted its projection of a drop in the Non Performing Loans of banks, by two more months.
Governor of the Bank of Ghana, Dr. Ernest Addison says he expects the reflection by the end of year.
Some industry watchers are also confident the move should afford banks the ability to offer more loans to businesses even as they recapitalize.
The Bank of Ghana in September issued a directive asking banks to write off all loans which were deemed unrecoverable.
The estimated amount of credit gone bad to be written off was 1.2 billion cedis.
At the time, the central bank was expecting the NPLs to drop from 21.3 to about 18 percent between September and November 2018.
But the latest economic data shows that the NPLs increased marginally to 20.1 percent as at October this year.
The Governor of the Bank of Ghana, Dr. Ernest Addison explained reason accounting for the shift.
“Partly because there are tax implications in doing those write-offs and some of the banks need to agree with the GRA on the tax treatment of those write off and therefore there has been delayed implementation of the write off of the 1.2 billion cedis,” he observed.
He however alludes to traces of poor lending practices by some banks which affects the entire industry performance.
Meanwhile some industry analysts believe the recapitalization of banks should afford them opportunities to expand their offerings to businesses.
This will however sail through as approved by the regulator as it has assured of not allowing any bank to break any rules going forward.
Meanwhile Dr. Addison is confident the NPLs should see a positive turnaround by year end.
“The tax issues which needs to be clarified means that the banks can go ahead and clean their books and some marginal uptake in loans in the system.”
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Source: Citibusinessnews.com
