The National Bank of Moldova (NBM) has approved the Regulation on Responsible Consumer Lending by Banks, which will take effect on July 1.
According to the National Bank, the Regulation is part of a package of macroprudential measures recommended for application by the national macroprudential authorities, with the purpose of achieving the intermediate goal of preventing and/or limiting excessive growth in lending and indebtedness. The document defines responsible lending as a lending activity in which the lender evaluates the creditworthiness of the consumer and does not allow the consumer to take on financial obligations in excess of his/her ability to pay. The regulation also imposes requirements on how to calculate individual consumer-level indicators and limit their levels, which will ensure sustainable lending, which in turn will support the financial system's contribution to economic growth. Limiting individual indicators, such as "loan-to-guarantee ratio", "debt service-to-income ratio", are widely used macroprudential tools in the EU and other advanced economies, and these indicators were introduced in order to ensure the responsible eligibility of debtors and provide access to finance to those who have the capacity to meet their obligations, thus limiting the debt of the most vulnerable categories. As noted by the NBM, thus, the loan to collateral ratio applies to loans for real estate investments and can not exceed 80%, and if the loan is partially and fully compensated and/or guaranteed by the state (for example, through the First Home program) or partially guaranteed by bank deposits - the RCG limit will be calculated taking into account the compensated and/or guaranteed share of credit (deducted). At the same time, the debt service-to-income ratio applies to a consumer loan and must not exceed 40% of the consumer's verified income. Thus, the sum of the average monthly payments calculated on all consumer credits/loans at the time of loan origination, together with the average monthly payment on the requested loan, must not exceed 40% of the consumer's average monthly net income from the last 6 months prior to the loan application. The regulation also provides some exceptions designed to ensure access to financing and to equalize the RSDV limit for consumers with higher or irregular incomes. In doing so, to achieve the goal pursued by the introduction of RSDV, the maximum term of a consumer's loan was also limited to 5 years for consumer loans and 30 years for real estate investment loans. In order to establish uniform rules for all participants involved in lending, at the same time the National Commission for the Financial Market approved a similar act for the non-banking market - the Regulation on Responsible Lending Requirements for non-banking credit institutions. // 26.05.2022 - InfoMarket
