Digital Lenders Under Scrutiny in Ghana: Concealed Charges and High Default Rates a Concern
Bank of Ghana Announces New Digital Lending Rules to Protect Consumers and Regulate Fintech Industry
In an effort to address the growing concerns surrounding harmful lending practices and financial crimes, the Bank of Ghana has announced a new set of digital lending rules. The directive, set to be issued in August 2025, will primarily focus on mandating all Virtual Asset Service Providers (VASPs) to register with the central bank by August 15, 2025 [1][3][5].
The new rules aim to establish a regulatory framework for digital financial services, including digital lending platforms, and ensure oversight and compliance within the digital lending ecosystem. This move is part of a wider effort by the Bank of Ghana to promote financial stability, prevent financial crimes, and protect consumers as digital financial services and crypto-related activities grow rapidly in Ghana.
Key points about the new rules include:
- Compulsory registration for all VASPs, both local and foreign entities serving Ghanaian residents, whether through physical locations or digital platforms.
- The registration is a precursor to broader regulation but does not yet confer a license or official approval to operate. Non-compliance could lead to sanctions or disqualification from future licensing.
- The new rules will mandate write-offs of fully provisioned, unrecoverable loans and publicly identify willful defaulters in financial statements.
- The regulation will also target curbing harmful lending practices by bringing digital lenders and virtual asset operators under supervisory oversight aligned with international best practices.
In addition, the new rules will enforce timely collateral recovery, cap Non-Performing Loans (NPL) ratios at 10% of gross loans by December 2026, and require mandatory, upfront disclosure of all applicable fees before transactions are completed [2][3][4].
Furthermore, the new rules will address opaque fees on card transactions and flag unethical pricing tactics, such as charging interest on inactive credit accounts where accumulated interest exceeds the original loan. The central bank is also responding to growing concerns over threats, shaming, and scams by online lenders.
The goal of the new digital lending rules is to shield vulnerable consumers and encourage responsible digital lending and fintech innovation. The Bank of Ghana's new directive will also cap Optional Issuer Fees (OIFs) at 2% and include licensing and authorization, clear disclosure of terms and interest rates, stronger data privacy standards, and ethical recovery and debt collection practices.
Banks have been instructed to review and realign pricing models with ethical, commercially sound standards to comply with the new rules. The new digital lending rules will represent a concrete step by the Bank of Ghana to regulate and monitor digital lending platforms, mitigate associated risks, and enhance consumer safeguards amid the burgeoning digital finance sector.
[1] Bank of Ghana's Digital Lending Rules [2] Ghanaian Banks to Cap Optional Issuer Fees [3] Bank of Ghana Cracks Down on Digital Lending Practices [4] Ghana Central Bank to Regulate Digital Lending [5] Bank of Ghana's New Digital Lending Rules
- In alignment with the announced digital lending rules, the banking-and-insurance sector will be expected to adhere to stricter regulations for digital financial services, including finance, business, and banking-and-insurance entities providing digital lending.
- The new rules issued by the Bank of Ghana stipulate that all virtual asset service providers, encompassing business, finance, and banking-and-insurance entities, must register with the central bank, aiming to foster transparency and protect consumers in the fintech industry.
