Bank of Ghana Announces Shift to Risk-Based Supervision: What to Expect from 2026

Introduction

The Bank of Ghana (BoG) is poised to fundamentally transform its regulatory framework, moving from a traditional compliance approach to a dynamic, risk-based supervision (RBS) model. This strategic pivot, outlined by Governor Dr. Johnson Asiama, is scheduled to take full effect starting in 2026. The initiative aims to bolster financial stability, promote responsible credit management, and ensure that Ghanaian banks are resilient enough to support sustainable economic growth.

Speaking at the Governor’s Day Programme organized by the Chartered Institute of Bankers, Dr. Asiama emphasized that the new framework is not merely a regulatory tweak but a comprehensive overhaul of how the central bank interacts with financial institutions. The goal is to create a banking sector that is not only compliant but also forward-looking, capable of identifying and mitigating risks before they escalate into systemic crises.

Key Points

Background

To understand the significance of this announcement, it is necessary to look at the context of the Ghanaian financial sector. Over the past decade, the Bank of Ghana has implemented several reforms to clean up the banking industry, resulting in a reduction in the number of licensed institutions but an increase in overall capital adequacy. However, global economic uncertainties and domestic pressures require a supervisory regime that is more agile and proactive.

The traditional “box-ticking” approach to banking supervision often fails to capture the nuances of complex financial operations and emerging threats, such as cyber risks or rapid credit expansion in volatile sectors. By adopting a risk-based style of organization, the BoG aligns itself with international best practices, such as those outlined by the Basel Committee on Banking Supervision. This approach acknowledges that not all banks pose the same level of risk to the financial system; therefore, supervisory intensity should be proportionate to the risk profile of the institution.

Analysis

The Core Philosophy: Quality Over Quantity

The Governor’s assertion that “credit growth will matter, but credit quality will matter more” is the cornerstone of the new policy. In previous economic cycles, aggressive lending targets sometimes led to high non-performing loans (NPLs), which weakened bank balance sheets. The new risk-based framework mandates that banks must demonstrate rigorous underwriting discipline. This means banks will need to improve their cash-flow analysis and sectoral focus. For example, lending to the real estate sector will require deeper due diligence compared to the previous standards.

Governance as a Pillar of Stability

The BoG is elevating corporate governance from a procedural formality to a strategic necessity. Dr. Asiama noted that governance will be treated as a core element of financial stability. This implies that Boards of Directors will be held accountable not just for compliance, but for the outcomes of their risk management strategies. If a bank faces a crisis due to poor risk appetite definition or weak internal controls, the regulatory engagement will be punitive and decisive. The era of tolerance for repeated weaknesses is ending.

The Role of Technology and Digital Infrastructure

The shift also acknowledges the digital transformation of banking. The BoG recognizes that modern banking risks are often technological. Therefore, the reforms include a focus on digital infrastructure. The central bank aims to ensure that banks have “rebuilt technological advance buffers.” This likely refers to robust IT governance, cybersecurity defenses, and disaster recovery plans. Furthermore, the BoG is committed to improving the interoperability of platforms, which allows seamless transactions across different banks and mobile money providers, thereby reducing settlement risks.

Practical Advice

For Bank Executives and Board Members

Preparation for the 2026 transition should begin immediately. Executives must:

1. Audit Risk Frameworks: Review current risk appetite statements. Are they clearly defined and understood by all levels of management?
2. Invest in Data Analytics: To meet the requirement for “richer transaction data,” banks should upgrade their data collection and analysis capabilities to better assess borrower creditworthiness.
3. Strengthen Internal Controls: Ensure that internal audit functions are independent and have direct access to the Board.

For Borrowers and Consumers

While the BoG’s focus is on banks, the ripple effects will reach consumers:

• Tighter Lending Criteria: Borrowers should expect more scrutiny on their income verification and debt-service ratios. The era of easy, loosely underwritten credit is closing.
• Focus on Cash Flow: Lenders will prioritize businesses and individuals with verifiable, steady cash flows over those with speculative assets.

FAQ

Conclusion

The Bank of Ghana’s decision to shift to a risk-based supervision style represents a maturation of the country’s financial regulatory landscape. By prioritizing credit quality, robust governance, and digital resilience, Governor Dr. Johnson Asiama is laying the groundwork for a banking sector that can withstand economic shocks and support the government’s broader economic goals. As the 2026 implementation date approaches, the focus will be on how banks adapt their internal mechanisms to meet these heightened expectations, ultimately creating a safer and more efficient financial ecosystem for all Ghanaians.