The Bank of Ghana (“BoG”) has directed all lenders, i.e. banks and other financial institutions, to expressly capture their rights of enforcement under 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, ensure improved disclosure during the lending process, and help reduce non-performing loans after the BoG observed that some borrowers are unaware of lenders' remedies in the event of default.
In the event of a default by a borrower, the lender is authorized under section 61 of Act 1052 to:
- sue the borrower on any covenant to perform under the credit agreement;
- realize the security interest in the collateral without initiating proceedings in court where the security interest is registered under law; and
- to appoint a Receiver or Manager to realize the security interest on behalf of the lender.