Capture your rights of enforcement in collateral agreements – BoG to Lenders

The Bank of Ghana (BoG) has directed Lenders to capture their rights of enforcement under section 61 of the Borrowers and Lenders Act 2020 (Act 1052) in credit and collateral agreements. 

In a notice dated April 4, 2022, the BoG said it had observed that some borrowers are unaware of lenders' right to enforcement under the Borrowers and Lenders Act, 2020 (ACT 1052) as well as other applicable laws.

The Act explains the process for the repayment and recovery of debts in sections 59-75. Particularly in section 61, a lender has three remedies in the event a borrower defaults on payment. They are:

1. a lender may sue the borrower on any covenant to perform under the credit agreement.
2. where a  security interest is registered under Act 1052, a lender may realise the interest in the collateral without initiating proceedings in court.
3. a lender may appoint a receiver or manager to realise the security interest on behalf of the lender.

The Central Bank said the directive is in line with its mandate “to promote and support the development of a fair, transparent and competitive and accessible credit market under section 76 of Act 1052, as well as to ensure improved disclosure during the lending process.”