Transforming the Banking Landscape in Morocco
In a significant move to bolster the country's financial system, Bank Al-Maghrib (BAM) is advancing plans to establish a secondary market specifically designed for non-performing loans. This initiative aims to alleviate the burden on banks and enhance lending capabilities throughout Morocco's economy. During a national seminar held in Rabat, central bank governor Abdellatif Jouahri highlighted the pressing issue of bad loans, which constituted 8.2% of total banking assets by the end of 2025, translating to over MAD 100 billion. This figure is notably high when juxtaposed with international standards, prompting urgent reforms.
Jouahri elaborated on the detrimental impact of these non-performing loans on the financial health of banking institutions, which in turn restricts their ability to grant new credit. The introduction of a dedicated secondary market is anticipated to facilitate the transfer of these problematic assets, thereby improving liquidity and enabling financial resources to be redirected towards businesses and households that require capital. This transformative reform is underpinned by draft legislation that delineates the legal framework necessary for the transfer of distressed debts.
Developed with the assistance of the International Finance Corporation, the proposed legislation seeks to streamline the transfer process while ensuring that any guarantees associated with the loans are automatically assigned to the new buyers. Additionally, it includes protective measures for borrowers, particularly concerning the safeguarding of personal data. To further enhance the banking sector's responsiveness, BAM has revised its internal regulations. A new circular issued in December 2025 categorizes loans as “sensitive,” tightens the criteria for restructuring these loans, and broadens the definition of what constitutes a default.
These adjustments are intended to foster greater clarity and discipline in the management of credit risk by financial institutions. Jouahri emphasized the importance of digital tools in modernizing recovery processes, with plans to implement online auction platforms for asset sales and provide technical resources to assist judiciary members and experts in accurately calculating interest. Collaborative efforts with the Ministry of Justice are also in place to promote the use of electronic payment methods for court fees.
Addressing Challenges in the Judicial System
In a related vein, Mounir Mountassir Bilah, the Secretary General of the Supreme Council of the Judicial Power, addressed the myriad challenges faced by commercial courts in resolving debt disputes. Judges frequently navigate complex issues regarding the accurate assessment of debt levels, the credibility of financial statements, and the calculation of associated interest and fees. Furthermore, there are ongoing concerns regarding guarantees and the transfer process of loans to third parties.
Bilah advocated for a synchronized response that leverages existing court practices, identifies legal shortcomings, and implements targeted reforms. He also emphasized the necessity for enhanced specialization within the judiciary and a closer collaboration between legal professionals and the banking sector. The seminar, which convened public institutions, banking representatives, and legal experts, aimed to develop actionable proposals to enhance the efficiency of Morocco's framework for recovering distressed loans.
As reported by moroccoworldnews.com.
