Omanghana
The Bank of Ghana (BoG) has called on regulated financial institutions to strengthen safeguards against risks associated with cross-border lending, overseas investments, trade finance and foreign currency exposures.
The requirements form part of the central bank’s Credit Risk Management Directive, scheduled for implementation on July 1, 2027. It will apply to banks, savings and loans companies, finance houses and financial holding companies.
Under the framework, institutions engaged in international financial transactions must establish effective procedures to identify, assess, monitor and manage country and transfer risks. The measures seek to limit potential defaults and deterioration in credit quality arising from economic, fiscal, political or financial difficulties in countries where counterparties operate.
The central bank also requires institutions to obtain the necessary regulatory approvals, where applicable, before introducing relevant products, entering new markets or establishing delivery channels. Lenders are expected to diversify their credit portfolios across sectors, geographical areas and borrower categories, while considering the limitations of their operating markets.
For lending to individuals, institutions must examine the purpose of the facility, its repayment arrangements and the borrower’s financial position. Assessments should include reasonable verification of income or cash flows, existing debt obligations and the borrower’s ability to withstand changes in economic conditions.
Boards will carry ultimate responsibility for the credit risks their institutions assume and for maintaining effective oversight. They must review credit strategies, policies and controls at least annually, or whenever significant changes warrant a reassessment. Senior management will be responsible for implementing those policies and clearly assigning lending, assessment, approval and monitoring duties.
The BoG says its supervision will take account of each institution’s size, complexity, risk profile and capital strength, with the broader aim of improving resilience across the financial system.
Source: Omanghana
