Romania’s National Bank wants to restrict consumer loans

Romania’s National Bank (BNR) is discussing with local banks the possibility to limit the population’s debts based on a model that BNR had applied until 2007, Florian Neagu, director of BNR’s Financial Stability Directorate, said yesterday. The central bank targets a maximum level of indebtedness of 35-40% for consumer loans, according to Profit.ro sources. There are currently banks that grant loans using a leverage of up to 70%, Neagu said. This means that a client can access a loan and spend up to 70% of his monthly salary to pay it back. "The funding granted to the population has exceeded the signal level for several months. Banks grant consumer credits based on their own rules. BNR is only notified,” Neagu said. In an earlier report, BNR showed that a sustainable indebtedness rate is around 35%, which it seems to be targeting now. The central bank is concerned not only with the pace of credit growth but also with the effects of higher interest rate on certain categories of borrowers, Neagu added. editor@romania-insider.com