Public sector workers in Ghana could soon find it difficult to access bank loans as commercial banks prepare to suspend lending under the Controller and Accountant-General’s Department (CAGD) payroll scheme over delays in loan repayments.

The Ghana Association of Banks (GAB) said banks can no longer continue giving loans to government workers when repayments deducted from their salaries are not transferred to the banks.

Chief Executive Officer of the Association, John Awuah, disclosed this at the Association’s Annual General Meeting, warning that banks could take action within the coming days or weeks if the situation remains unresolved.

According to him, the problem has contributed to the growing number of non-performing loans in the banking sector, putting pressure on banks and affecting their ability to lend.

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“We have begun discussions, and in the coming weeks and days we are going to take action to suspend total lending to public sector workers under the Controller and Accountant-General’s payroll,” he said.

Awuah explained that the main concern is that although salaries are paid to public sector workers, loan repayments are not reaching the banks as expected.

“This is serious because we cannot continue to do this to the industry where salaries are being paid but our loan repayments are not remitted,” he stated.

He revealed that the banks had planned to suspend lending about three months earlier but put the decision on hold following intervention from senior officials.

However, he indicated that the Association was no longer prepared to continue waiting without a solution.

“We have had all the discussions and whatever we need to say has been said, but still we don’t get the results,” he said.

The planned suspension also comes as the Bank of Ghana pushes banks to reduce their non-performing loans to below 10% by next year.

According to Awuah, the central bank’s directive has made it necessary for banks to take stronger steps to recover loans and prevent further losses.

The decision, if implemented, could affect thousands of public sector workers who depend on salary-backed loans to meet personal and financial needs.

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Meanwhile, the Association is expected to work with the Bank of Ghana to develop a framework for the full implementation of the Lenders and Borrowers Act.

The proposed suspension has not yet taken effect, but the Association’s warning signals growing concern among banks over delays in receiving loan repayments under the government payroll system.

DR/MA

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