Banks in Ghana are considering suspending new loans to public sector workers as concerns grow over delays in the transfer of loan repayments deducted from employees’ salaries.
The Ghana Association of Banks (GAB) says the proposed measure could affect workers whose salaries are processed through the Controller and Accountant-General’s Department (CAGD).
Speaking at the association’s 43rd Annual General Meeting in Accra, the Association's Chief Executive Officer John Awuah said banks may suspend lending to government workers in the coming weeks if the outstanding payments are 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 to the Controller and Accountant General,” he said.
According to Awuah, the issue has persisted for more than a decade, with banks sometimes waiting months for funds already deducted from workers’ salaries to be transferred to them.
He said banks were awaiting three months of outstanding remittances as of October, placing additional pressure on their finances and contributing to loan impairments.
“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,” Awuah stated.
He explained that the affected workers had already had their loan repayments deducted, meaning the outstanding responsibility was for CAGD to transfer the funds to the respective banks.
The association is hopeful the arrears will be cleared to prevent the proposed suspension, which could affect teachers, nurses, doctors and other public sector employees seeking new credit.
The development comes as the Bank of Ghana pushes banks to strengthen their loan portfolios and reduce non-performing loans.
