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Indebtedness set at 35pc of income for banks having failed to get in line with BNR regulationa

Romania's banks having failed to submit internal rules to the National Bank of Romania (BNR) for approval concerning consumer credit adjusted for the new regulation of BNR will be automatically included in the category of banks that may not extend loans for a customer indebtedness rate exceeding 35 percent of income.

The banks had until October 6 to submit their internal rules for credit ceilings on retail loans to the BNR Oversight Directorate.

BNR adopted its new regulation concerning the limitation of crediting to individuals this August, and the banks were extended 45 days to comply and draw up their own internal rules.

The regulation regards mainly the banks with a relaxed crediting policy which indebtedness rules allows for levels of up to 70 percent of the income, which includes more than one source of income derived by the applicants for personal loans.

'In the case of borrowers which carry out individual crediting at the time the present regulation comes into force based on internal crediting rules that have failed to get the approval of BNR, the indebtedness ceiling shall be 35 percent,' reads the regulation concerning limiting the credit default risks of individuals, done on August 22 by the BNR.

The regulation places the banks under the obligation to request loan applicants to produce tax returns and establish allowed indebtedness differently. Thus, creditors will have to judge the repayment capacity of applicants against a scale of incomes deemed eligible by the borrowers, which shall not exceed by more than 20 percent the levels of the year before. Excepted will be incomes that the applicants may prove are regular.

The bank will also be placed under the obligation to set indebtedness levels in a differentiated way by applicant categories, loan destination (mortgage, consumer, etc.), type (forex denominated, indexed, interest, life, applicant's behaviour and guarantees), allowing for certain risks, such as forex risks, interest risks, and the risks of loan costs increasing.

Sursa: http://www.rompress.ro

Tags: bnr banks risks regulation rules failed income indebtedness

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