Ghana Association of Banks threatens to halt lending to government workers

The Ghana Association of Banks (GAB) has warned it may suspend new payroll-based lending to public sector employees if the Controller and Accountant-General’s Department (CAGD) does not resolve significant delays in loan deduction remittances. Currently, payments from the department are three months in arrears, a situation that GAB says is undermining the financial health of the banking sector and its ability to support government workers, including teachers and nurses. This threat follows concerns that banks are bearing the cost of administrative delays that prevent them from recovering loan installments directly from source deductions.

According to GAB Chief Executive Officer John Awuah, commercial banks are currently absorbing losses because they cannot access the funds already deducted from workers' salaries to service their outstanding debts. This delay directly impacts bank profitability and asset quality at a time when the industry is under pressure to improve its balance sheets. The association is particularly concerned about maintaining the downward trend of non-performing loans (NPLs). While the industry's NPL ratio improved to 15.7% in August 2026, the ongoing remittance delays from the CAGD threaten to reverse these gains and make it increasingly difficult for banks to reach the regulatory target of a 10% NPL ratio by December 2026.

The issue of delayed remittances has reportedly persisted in various forms for over a decade, but the current three-month backlog has reached a critical point. GAB is calling on the CAGD to expedite the transfer of these deductions to ensure that public sector employees continue to have access to credit facilities, which many rely on for essential needs. If the situation is not resolved, the proposed suspension of lending would force banks to halt the processing of new loan applications for government employees to manage their risk effectively and protect shareholder value.