New lending guidelines enforce on February 1

The guidelines on crediting for individuals will enforce on February 1, 2004. The steps taken are only temporary and are intended to keep the growth speed of this kind of financing in check, particularly because consumption has outrun production, NBR vice-governor Mihai Bogza on Tuesday said.

“The steps are temporary and reversible. We could drop some provisions in the course of time, as long as the prudentiality indices stay within sound limits and the macroeconomic indicators find a balance. The statistical data for the first nine months highlight a 6.4 percent increase in the consumption of the population, while the processing industry only grew by 4 percent. The production is obviously lagging behind demand,” Bogza explained.

NBR’s vice-governor advises people not to rush and buy things in instalments because consumer lending will not be halted. He warns people of the danger that some might get into commitments above their repayment capability at this time.

NBR finished the mortgage credit norms and the new steps were sent to banks for study. The document says a mortgage loan shall not be higher than 75 percent of the value of the building and the monthly instalment shall be worth up to 35 percent of the income made by the applicant or by the applicant’s family where applicable.

At the same time, the central bank is working on the minimal guidelines for granting consumer loans that will enforce on February 1, as well. The main provisions target introducing a down payment of 30 percent of the price of the durable products purchased and requesting a warrantor in case of loans taken out for personal needs.

Bogza explained that even though the norms would be published by the end of this year, they would enforce in the first month of 2004 to give banks time to adjust their internal regulations. “We will give the banks some time to modify their internal regulations and negotiate possible contractual terms with the beneficiaries or the arrangements with the stores that sell merchandise in instalments,” the NBR official concluded.