The Bank of Ghana has issued the Large Exposures Directive for Banks, Savings and Loans, Finance Houses and Financial Holding Companies.

The objectives of the directive are to limit the maximum loss that Regulated Financial Institutions (RFIs) can incur in the event of the sudden failure of a counterparty or a group of connected counterparties to a level that does not endanger the RFI’s solvency; Provide direction to RFIs on regulatory requirements in order to eliminate any ambiguities in the interpretation of the rules related to limits on financial exposures; among others.

Section 92 (2)(a) of Act 930 states that the Bank of Ghana may issue directives to provide for the lending limits on credits extended to insiders and the limitations for advances or credit facilities to a single borrower.

Section 77 (1) of Act 930 provides that the BoG may, in respect of a prudential limit prescribed under this Act, impose a stricter limit for banks, specialised deposit-taking institutions or financial holding companies or a class of specialised deposit-taking institutions or a particular bank, specialised deposit-taking institution or financial holding company for the period that the Bank of Ghana considers appropriate.

The effective implementation date of the directive shall be January 1, 2026.

RFIs are expected to conduct impact assessments prior to the implementation date and where there are non-compliance with the requirements of this directive, submit a credible Board-approved plan acceptable to the BoG by June 30, 2025 detailing the manner RFIs propose to achieve compliance.

The submitted plan shall include the proposed time frame within which it proposes to become fully compliant with this Directive which shall not, in any event, exceed six (6) months from the required submission date.

This directive is applicable to all RFIs’ exposures to single counterparties and groups of connected counterparties irrespective of their performance or the quality of any pledged collateral.