THE JFT EDIT

As Ghana’s financial and real estate sectors continue to evolve, industry stakeholders are paying closer attention to how banks manage and revalue properties and assets acquired through loan defaults. During a recent stakeholder engagement organized by the Ghana Association of Real Estate Brokers (GAREB) in collaboration with the Bank of Ghana’s Collateral Registry Department at Alisa Hotel, discussions around the Borrowers and Lenders Act, 2020 (Act 1052) highlighted the importance of transparency, valuation, and proper handling of collateral assets.

Under Ghana’s secured transactions framework, banks and lenders may take possession of collateral assets when borrowers default on loan obligations. These assets can include Land, Houses, Commercial buildings, Vehicles, Machinery, Business equipment. Financial experts explain that revaluation becomes necessary because the market value of an asset may change over time due to Inflation, Currency fluctuations, Changes in property market conditions, Depreciation or appreciation of assets and Economic conditions. Banks therefore periodically reassess the value of collateral assets to determine their current market worth and the recoverable value of outstanding loans.

Under the Borrowers and Lenders Act, 2020 (Act 1052), lenders are required to properly register collateral and maintain accurate records of security interests through the Collateral Registry. The Rules for the Effective Implementation of Act 1052 also require important collateral information to be recorded; including Description of the property, Collateral value, Location of the collateral;
Identification details of the borrower and lender. Industry analysts say this creates accountability and helps lenders monitor the changing value of secured assets over time. When a bank acquires a property through loan recovery or foreclosure the listed will be required.
1. Professional valuers may be engaged to assess the current market value;
2. The bank reviews prevailing market conditions;
3. Updated valuation reports are prepared;
4. The asset may be classified based on recoverable or realizable value;
5. The bank may decide to Sell the property, Lease it, Restructure the loan Or hold the asset temporarily.

Financial institutions are generally expected to ensure that valuations are fair, transparent, and professionally conducted. Officials at the stakeholder engagement emphasized that the Collateral Registry system helps improve transparency in Ghana’s credit market by the following:
• Registering security interests;
• Tracking collateral assets;
• Supporting searches on encumbered properties;
• Facilitating enforcement and discharge processes.

The Bank of Ghana notes that the Registry was established to support a fair, transparent, competitive, and accessible credit market in Ghana. Experts continue to advise buyers to conduct; Collateral Registry searches, Lands Commission searches and Professional property valuations before purchasing any property, especially distressed or bank-related assets. This helps buyers determinem whether the property has existing encumbrances, whether the asset has been involved in loan recovery and the true market value of the property. The discussions at the GAREB-BoG program reinforced the growing importance of due diligence, valuation transparency, and proper collateral management in Ghana’s real estate and banking industries.

By : Jemima Fenteng -Twum