The high rates and loans with interest of hundreds of percentage points continue to be a burden for many citizens who raised nonbank loans. As from July 1, the area has been supervised by the National Bank of Moldova (NBM). The institution aims to come up with policies to remedy the over-indebtedness of citizens. The issue was developed in the podcast “Give sense to money” by NBM vice governor Constantin Shchendra, IPN reports.
“The intervention plan primarily consists in the monitoring of the observance of regulations that were adopted last year, but took effect on September 30. These regulations refer to responsible lending,” stated Constantin Shchendra.
The vice governor also said that he knows about the problem of loans with effective interest rates of hundreds of percentage points on the nonbank lending market. This cannot be called lending as it is rather evident abuse by nonbanking lending organizations. “Last year, there was adopted a law that comes to limit these exorbitant rates. Now the law says the annual interest rate cannot be higher than 50% and actually limits the commissions and penalties to 0.04% a day,” he stated.
As to the problem of over-indebtedness of the population following a number of overlapping crises, Constantin Shchendra said that in general, the number of people who raise loans is not as high as, for example, in Romania or other EU countries. However, when the situations are analyzed separately, it is seen that there are many over-indebted persons and this situation can generate a social problem. These persons continue taking out loans to cover particular needs and their situation worsens further, up to the point when they need to sell the apartment, house, car to repay the loan they knew from the start they will be unable to repay.
The vice governor said the list of nonbank lending entities that will be supervised by the NBM is huge and includes also hundreds of currency exchange facilities, but this does not mean that the central bank will not be vigilant and they will be helped by the risk-based approach they adopted. They analyze the risks and go to the entities where they consider the risks are bigger.
Constantin Shchendra called on the nonbank lending market operators to ensure transparency in the relations with clients and to be correct in what they do, as they act in many of the EU member states.
As to citizens’ expectations, the vice governor said that these are related to two aspects, namely consumer protection and the stability and security of the system. Therefore, they need to work further with the National Commission for Financial Markets so as to make sure that these expectations are met.
He recommended those who want to borrow to draw attention to the company’s reputation and level of transparency, to devote careful attention to lines written with small characters as these could hide less pleasant things and to fully read the loan agreement. One can now borrow money from a bank with an interest rate of 12-13%, while at a nonbank lending company, the rate on a loan in lei is higher than 20-25%, but should not exceed that celling of 50% plus commissions and penalties.
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