Morocco is preparing to establish a secondary market for non-performing loans (NPLs) in a bid to ease pressure on banks and stimulate lending across the economy, officials said at a national seminar in Rabat.
Abdellatif Jouahri, governor of Bank Al-Maghrib, said bad loans accounted for 8.2 percent of total banking assets by the end of 2025, exceeding MAD 100 billion, a ratio he described as elevated relative to international norms.
“These loans continue to weigh on bank balance sheets and constrain their ability to extend new credit,” Jouahri said. “A dedicated secondary market will allow lenders to transfer these assets, improve liquidity, and redirect financing toward businesses and households.”
The proposed reform relies on draft legislation outlining the legal framework for transferring distressed debt. The draft, developed with technical support from the International Finance Corporation, is designed to simplify procedures while ensuring that guarantees linked to the loans automatically transfer to buyers. Safeguards will also protect borrowers, with particular attention to personal data.
In addition to the secondary market, the central bank has revised its internal rules to strengthen credit discipline. A circular issued in December 2025 introduced a new category of “sensitive” loans, tightened conditions for restructuring, and expanded the definition of default, aimed at improving clarity in how banks manage credit risk.
Digital tools are expected to play a key role in modernizing recovery processes. Plans include online auction platforms for asset sales and technical tools to assist judges and experts in calculating interest. Coordination with the Ministry of Justice will expand the use of electronic payment systems for court fees.
Banks have also adopted a code of conduct under central bank supervision, setting standards for transparency in debt recovery and prioritizing amicable solutions with clients before legal action.
Mounir Mountassir Bilah, secretary general of the Supreme Council of the Judicial Power, outlined the challenges faced by commercial courts in handling debt recovery cases and emphasized the need for modern tools and improved procedures to support efficient resolution.
Analysts say Morocco’s initiative mirrors global trends where secondary markets for distressed assets are used to improve banking sector liquidity, reduce systemic risk, and encourage credit growth. By enabling banks to sell NPLs, the market can free up capital for lending to households and businesses, supporting economic activity amid persistent regional and global uncertainties.
The government and central bank have highlighted that effective implementation will require strong coordination between banks, regulators, and the judiciary, as well as robust legal protections for both lenders and borrowers.
Morocco’s banking sector has seen steady growth in recent years, but non-performing loans remain a key constraint to credit expansion. The secondary market, combined with tighter internal rules and digital recovery tools, is intended to strengthen the sector’s resilience while fostering broader economic growth.
