Loans from January under the new rule, be careful if you plan to borrow

Bank, ATM, photo: Shutterstock

The term for the repayment of consumer and cash loans that banks will grant to citizens from January next year will be a maximum of six years, according to the regulations of the National Bank of Serbia from the end of 2018 .

These terms, as confirmed to Tanjug at the central bank, will not change, regardless of the fact that in July of this year, the NBS enabled citizens who have loans to extend repayment terms by two years.

This was later done as a measure to help the population due to the pandemic.

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They remember that to achieve the desired objective, without significant impact on the credit market, a gradual reduction of the acceptable terms is prescribed: for loans approved during 2019 – eight years, during 2020 – seven years and loans approved as of January 1, 2021 : six years.

The exception is consumer loans for the purchase of motor vehicles, for which there is no staggered annual reduction in the repayment period, and as of January 1, 2019, the acceptable maturity of these loans is up to eight years.

The NBS says for Tanjug that the December 2018 package of central bank measures was adopted in order to encourage the practice of sustainable loans to households, reacting to the then increasingly frequent occurrence of unintended unsecured loans to households. households for unjustifiably long terms.

The NBS adds that the main objective of these measures was to avoid negative consequences for citizens and financial stability in Serbia.

Such consequences could occur if, through the creation of new problem loans, the risks inherent in granting loans without uncontrolled purpose materialize to households in terms that do not match the risk of this type of product.

“Therefore, acceptable terms are prescribed to approve consumer, cash and other loans granted to households, other than housing loans or current account deficits, to which the bank can approve these loans without affecting capital,” he says. the NBS.

accountant, Photo: Hello! / Dejan Briza

The central bank explains that such regulatory solutions encourage careful risk-taking by banks by guiding them towards sustainable loans and avoiding excessive exposure to certain types of loan products, without introducing an administrative measure that prohibits certain types of loans.

In July of this year, certain adjustments were made to the aforementioned measures.

Additional opportunities have been opened for banks to offer adequate relief to borrowers who borrowed before extraordinary circumstances occurred in connection with the repayment of consumer loans, cash and other loans approved before March 18, 2020 (refinancing or change of the expiration date of the last installment according to certain conditions), without affecting the bank’s capital.

This was determined by the fact that from that day on, both the debtor and the bank were informed about the circumstances related to the pandemic and the state of emergency, so that they could evaluate the possibility of liquidating new obligations in the existing circumstances.

The NBS believes that the current crisis is more of a reason to approve new loans according to the prescribed dynamics of lower maturities.

Likewise, limiting the maximum maturity in the manner provided by the regulations adopted in December 2018 is one of the effective mechanisms to prevent the over-indebtedness of citizens and the appearance of new problem loans.

The central bank notes that it should be noted that any borrowing for periods longer than prescribed is still allowed if the bank maintains an adequate level of capital, that is, if it has sufficient own funds at all times to meet all regulatory requirements .