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The latest Monetary Policy Committee (MPC) report indicates that the Non Performing Loan (NPL) ratio of the banks has improved.

According to the report, the NPL ratio of the banks, which was 17.2 percent in January 2011, improved to 16.1 per cent in March 2011. This excludes assets transferred for special recovery.

The settlement of a substantial part of the arrears owed by government to contractors and service providers in March, this year, the MPC said, was expected to contribute to a further reduction in the NPL ratio.

On some other developments about the banking sector, extension of credit by commercial banks to the private sector slowed down significantly in the first quarter of 2011.

Credit to the private sector declined by 4.2 percent in real terms in the first quarter of 2011, as against a growth of 9.7 percent during the fourth quarter of 2010.

Overall developments in the banking system through February 2011 however showed strong asset growth and improvement in financial soundness indicators.

Total assets of the banking industry grew by 25.2 per cent to GH17.9 billion (33.5 percent of GDP) at the end of February 2011, compared to 29.6 percent growth (31.9 percent of GDP) achieved during the corresponding period of 2010.

Meanwhile, all banks have satisfied the Capital Adequacy Ratio of the banking industry, which stood at 18.5 percent as at February 2011.

Meanwhile, they have all satisfied the minimum capital requirement.

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