The latest data from the Bank of Ghana (BoG) show that loan defaulting rate has increased.The situation could prevent financial intermediaries from lending to both individuals and enterprises.According to the Monetary Policy Committee (MPC) of the BoG latest report on the economy, the Non-Performing Loans (NPL) ratio deteriorated from 16.2 percent in December 2009 to 17.6 percent as at December 2010.Most contractors, who executed government projects, are indebted to the banks and this has affected liquidity in the system.According to the banking sector developments report, financial soundness indicators in the banking industry, which is measured in terms of portfolio quality, liquidity and capital adequacy, was strong in the last quarter of 2010.All the banks maintained capital adequacy ratios within the prudential limits.Credit conditions survey in January 2011 also showed that access to credit continues to improve.Commercial banks eased credit conditions for both Small and Medium-sized and large enterprises through reductions in margins on average loans and increased size of credit.The survey pointed to an overall improvement in credit conditions for both households and enterprises.However, it also revealed that credit conditions for mortgages was tightened through additional collateral requirements.Meanwhile, the asset base of the banking system, together with other profitability indicators, improved substantially in 2010 compared to similar indicators at the end of December 2009.Total asset base of the banking system was estimated at GH¢17.4 billion as at the end of December 2010, representing an increase of 23.9 percent over the total asset position recorded in December 2009.Importantly, deposits increased by 31.7 percent to GH¢11.8 billion, which led to an expansion in the assets of commercial banks.Credit: Charles Nixon Yeboah/Business Guide