On December 27, Minsk /BelTA correspondent/. The National Bank of Belarus has lifted temporary restrictions on the prohibition of lending to individuals in foreign currency, the Head of the Information Department - Press Secretary of the National Bank, Anatoly Drozdov, informed a BelTA correspondent.
"By Resolution No. 557, the National Bank has amended Resolution No. 105 of July 14, 2009, which introduces a permanent ban on lending to individuals in foreign currency," he said.
As a reminder, Resolution No. 105 "On Amendments and Additions to the Instruction on the Procedure for Banks to Provide (Place) Funds in the Form of Loans and Their Repayment of December 30, 2003 No. 226" suspended the issuance of loans in foreign currency to individuals, with the exception of individual entrepreneurs, until January 1, 2011.
Anatoly Drozdov explained that this was done in order to dedollarize the economy, reduce currency risks for citizens and the country's banking system.
The National Bank believes that banks' lending to citizens in foreign currency is associated with a high level of risk, related to the probability of untimely repayment (non-repayment) of the loan and payment of interest and other payments due under the loan agreement. This is due to the low financial literacy of the population and their inability to adequately assess the risks of servicing loans in foreign currency. The main income of the population is wages, which are paid in Belarusian rubles. Given that the exchange rate of the Belarusian ruble is pegged to a basket of currencies, exchange rate fluctuations can lead to an increase in the cost of loans, which, in turn, can lead to problems with their repayment. It should also be taken into account that citizens may not fully understand the extent of their responsibility when entering into loan relations.
The ban on lending to individuals in foreign currency allows for a reduction in the level of risks for banks associated with the probability of untimely repayment (non-repayment) of the loan and payment of interest and other payments due under loan agreements. This measure is also implemented in order to increase the social protection of citizens and enhance the financial stability of the banking system of the Republic of Belarus.
Measures to protect the population from the risks of obtaining foreign currency loans are also being taken in other countries. For example, as of today, Ukraine prohibits lending to individuals in foreign currency, with the exception of loans for medical treatment and education abroad. These loans are provided on a non-cash basis and are transferred directly to non-resident accounts. The ban is in effect until January 1, 2011. According to Ukrainian news agencies, the National Bank of Ukraine has prepared a draft law on a complete ban on providing loans to individuals in foreign currency for consumer needs, including real estate financing. In countries such as the Russian Federation, Kazakhstan, and Latvia, there are no bans on providing citizens with loans in foreign currency.
In Belarus, the debt of individuals on loans as of January 1, 2010, amounted to Br15955.45 billion, including Br3022.68 billion in foreign currency ($1057.3 million): Br2038.93 billion for consumer needs, and Br983.75 billion for real estate.
The debt of individuals on loans as of November 1, 2010, amounted to Br20796.67 billion, including Br2056.01 billion in foreign currency ($682.8 million): Br1237.84 billion for consumer needs, and Br818.17 billion for real estate. The amount of overdue and prolonged debt of individuals as of November 1, 2010, was Br107.470 billion, including Br77.748 billion for foreign currency loans ($25.8 million).
The share of overdue and prolonged debt on foreign currency loans in the total portfolio of foreign currency loans to individuals was 2.3% as of January 1, 2010, and 3.8% as of November 1, 2010.
Thus, the adoption of Resolution No. 557 will strengthen the social protection of the population, ease the tension associated with the expectation of the lifting of the ban on lending to individuals in foreign currency in 2011, increase the financial stability of the banking system, and facilitate further measures aimed at the de-dollarization of the economy.
BELTA