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New Set of NBS Measures to Facilitate Citizens’ Access to Financing

New Set of NBS Measures to Facilitate Citizens’ Access to Financing

Serbia
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On 17 August 2020, the National Bank of Serbia (“NBS”) adopted the Decision on temporary measures for banks to facilitate access to financing for natural persons (“Decision”), which was published in the Official Gazette of RS no. 108 on 20 August 2020 and which will enter into force on 28 August 2020.

The Decision provides conditions for easier access to financing for citizens and establishes temporary measures and activities that banks may implement to that end.

The Decision prescribes three sets of temporary measures that should facilitate access to housing loans for citizens, thus supporting real sector i.e. construction industry through faster turnover of assets, while providing the possibility of extension of housing loan repayment periods for maximum five years and temporary relaxation of the approval procedure for household short-term loans up to a certain amount.

The Decision aims to stimulate future economic growth and prevent potential negative effects of the COVID-19 pandemic on citizens and businesses, while maintaining financial stability.

Facilitated access to housing loans

The first NBS measure relates to the approval of housing loans to citizens for newly constructed apartments and at more favourable terms.

Namely, the newly adopted preferential treatment envisages that, in addition to fully completed apartments, housing loans may also be approved for:

  • Residential real estate, which are part of buildings in construction, in case of project financed by the bank;
  • Buildings in construction, regardless of the degree of completion, with the Building Directorate of Serbia as the holder of the construction permit or in case they are part of the measures of government support to specific categories of natural persons;
  • Buildings in construction with minimum 60% degree of completion in case of project financing by another bank or project of a legal entity investor.

Up to the adoption of the said NBS measures, banks could approve housing loans for the purchase of minimum 80% completed buildings. Therefore, the new measures encourages banks to approve housing loans without having to wait for the residential buildings to be completed in full or for its major part.

We would also recall that by the amendments to the Decision on measures for preserving and strengthening the financial system stability adopted in June 2020, the NBS enabled the reducing of mandatory participation in housing loan from 20% to 10%, in case of first home buyers.

Extension of maturity for already taken loans

The second set of NBS measures refers to extension of repayment deadlines for already approved loans.

Namely, claims against borrowers – beneficiaries of housing loans, who had not been late in loan repayment for more than 90 days until the moment of entry into force of the Decision and who had not been restructured or problematic – shall not be considered as restructured or problematic claim or problematic loan in terms of NBS regulations, if the loan was extended by five years at most from the day of maturity of final instalment of such loan.

During this and the next year, banks may offer facilities to borrowers who had taken out a loan before the decision entered into force by extending the repayment deadline for housing loans by five years at most, without any change, i.e. deterioration of status regarding assessment of the regularity of the borrower’s loan repayment

Facilitated access to short-term dinar loans up to a certain amount

Banks may grant a loan of up to RSD 90,000 to a natural person who does not receive his/her wage or pension via an account with that bank, with the maturity of up to two years, and they may accept, as relevant evidence of employment and wage or pension of the borrower in the past three months, the signed statement on such facts issued by such borrower under full criminal and material liability.

Banks will be able to apply the adopted set of measures until the end of 2021.

This article is to be considered as exclusively informative, with no intention to provide legal advice.
If you should need additional information, please contact us directly.

By Milan Petrovic, Managing Partner, and Natalija Dukic, Associate, PR Legal

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