The Governor of the Bank of Ghana (BoG), Dr Johnson Asiama, has called for improved mechanisms that will allow banks to provide financing to distressed but viable companies without compromising credit discipline.

Dr Asiama said  businesses facing financial difficulties should not automatically be treated as failures, arguing that some companies could recover if they receive timely working capital support to complete existing contracts and sustain operations.

He made the remarks while opening a forum organised with the Chartered Institute of Restructuring and Insolvency Practitioners on non-performing loans and financing for companies undergoing restructuring.

According to him, the key challenge was finding a balance between supporting businesses in distress and ensuring that banks maintain sound lending practices.

“The question we put to the room was a hard one: how do banks lend to a distressed but viable company without weakening credit discipline or concealing losses?” he said.

Dr Asiama noted that some struggling businesses still have strong fundamentals, including existing orders, customers and employees, but may face temporary liquidity challenges.

“Because a business in difficulty is not always a business that has failed. Sometimes the orders are still there. The customers have not left. The staff turns up. What is missing is the working capital to finish contracts already signed, and without it a company that could have recovered goes under,” he said.

The BoG Governor said the Corporate Insolvency and Restructuring Act, 2020 (Act 1015), provides a legal framework for rescuing viable businesses rather than focusing only on liquidation.

He, however, stressed the need to translate the framework into practical solutions that enable financial institutions to confidently support companies undergoing restructuring.

“Act 1015 gave us a framework for rescuing viable businesses instead of liquidating them. The work now is to make that framework something a bank can actually lend into,” Dr Asiama stated.

He added that businesses with recovery potential should not collapse because financial institutions lack clarity on restructuring decisions.

“A company worth saving should not close for want of a decision nobody was sure how to make,” he said.