The Bank of Ghana has directed all lenders (banks and other financial institutions) to expressly capture their rights of enforcement pursuant to Section 61 of the Borrowers and Lenders Act 2020 (Act 1052) in their credit and collateral agreements.

This is to promote and support the development of a fair, transparent, competitive and accessible credit market under Section 76 of Act 1052, as well as to ensure improved disclosure during the lending process.

Secondly, it will help reduce Non-Performing Loans.

The move is coming after the Bank of Ghana observed that some borrowers are unaware of lenders rights of enforcement under the Borrowers and Lenders Act 1052 and other applicable laws relating to same.

Act 1052 provides a regime for the rights and obligations of borrowers and lenders.

Specifically, Section 59-75 enumerates the process for the repayment and recovery of debts.

Again, Section 61 of Act 1052 sets out the remedies available to a lender in the event of a default by a borrower as a lender may sue the borrower on any covenant to perform under the credit agreement and where a security interest is registered under Act 1052, a lender may realise the interest in the collateral without initiating proceedings in court.

A lender may also appoint a Receiver or Manager to realise the security interest on behalf of the lender.