GHASALC attributes high non-performing loans to public sector workers absconding abroad

The Ghana Association of Savings and Loans Companies (GHASALC) points to a persistent rise in Non-Performing Loans (NPLs), attributing it to public sector workers who borrow funds, default on payments, and leave the country.

The Executive Secretary of the association, Tweneboah Koduah Boakye, emphasized that this situation was posing significant operational challenges for savings and loan companies in the country.

Addressing the 14th Annual General Meeting of the association, Mr. Boakye highlighted that while some members have achieved success, a considerable number are grappling with liquidity challenges.

“What we have realized is that some people will come to us and they are teachers, nurses, doctors or work in the government sector. They want loans and they qualify so we give it to them, but immediately after taking them, they leave the country. We are now constantly monitoring these people because they are part of the non-performing loans issues we have been facing,” he said.

The Executive Secretary further called on various embassies in the country to help the association track the workers when exiting the country.

He explained that government workers travelling abroad must be checked for a good credit report before being granted visas.

“We want to suggest to other stakeholders especially the embassies that if someone is a government worker and relocating to a different country, there should be evidence that you don’t owe and if you owe, there should be evidence that you have made reasonable provisions with your company,” he added.

The association warned that it may halt loan disbursements to public sector employees if the trend persisted.

More on Non-Performing Loans(NPLs)

A non-performing loan (NPL) is a loan in which the borrower has not made repayments of principal and/or interest for at least 90 days.

When a bank is unable to recover non-performing loans, it can repossess assets pledged as collateral or sell off the loans to collection agencies.