Banks, non-bank credit institutions and savings and loan associations will be obliged to comply with the requirements of responsible lending.
The corresponding legislative initiative on amendments and additions to the laws on the activities of banks, on non-bank credit organizations and savings and loan associations was registered in the parliament. The bill stipulates that before concluding a loan agreement, a bank, non-bank credit institution or savings and loan association will have to assess the bonitet of the recipient of the loan (the borrower's ability to repay the loan) in accordance with the principle of responsible lending. Such an assessment will be made on the basis of information requested from the recipient of the loan, as well as by reconciliation of registers and information systems and other evidence. The indicators of responsible lending and the requirements for assessing the bonitet of recipients of loans will be set by the supervisory authorities - NBM and NCFM. According to the bill, when assessing the bonitet, the ability of the borrower to take on a specific financial obligation that can be fulfilled, together with other existing financial obligations, taking into account all hidden factors that may affect the client's bonitet (including information about his/her income, credit history, etc.) . Also, when assessing the bonitet, the ratio of the rate and the average monthly income of all obligations of the debtor under the loan agreements is limited, while initially there should be a presumption that the loan recipient will be able to fulfill his/her financial obligations during the entire term of the loan agreement. If the assessment of the bonitet was made incorrectly through no fault of the client, banks, non-bank credit institutions or savings and loan associations will not be able to charge the borrower with interest, penalties and other commissions from late payments. Also, a number of new requirements may appear in the legislation regarding the loan amount issued to borrowers. It is stipulated that the total loan amount must be reasonable, comply with good business practice and not upset the balance between the borrower and the lending institution. Non-compliance with these requirements will be determined if the total cost, including interest, commissions, penalties, interest on arrears and any other types of payments, exceeds the total cost of the loan, and also if the interest rate of the loan is higher by 50% of the total loan amount, and the remaining expenses (commission, late fees and any other types of payments), with the exception of interest, for one day of the agreement above 0.04% of the total loan amount. The bill stipulates that the court will be able to reduce the total amount of the loan, after assessing the nature of the contractual relationship between the financial institution (bank, non-bank credit institution of savings and loan association) and the borrower, the costs of the financing party, the circumstances of the loan agreement and other circumstances. The measures provided for in the draft law are expected to increase the responsibility of lending institutions to assess the ability of consumers to repay borrowed funds; will reduce the likelihood of issuing risky loans; protect borrowers from economic damage, for example, financial losses from expensive loans; will increase consumer confidence in banks and non-bank financial institutions. // 21.12.2021 — InfoMarket
