Bratislava, January 2 (TASR) – Financial institutions need to be more prudent when providing loans now that an amendment to the Consumer Loans Act has taken effect as of January 1.
The piece of legislation was drafted to accommodate recommendations by the Slovak central bank (NBS) from 2014 to introduce more stringent conditions regarding people’s ability to pay back their loans.
Consumer loans account for an important share of loan provision, with their proportion rising between 12-15 percent annually over the past year.
“In terms of the stability of the Slovak financial sector, it’s therefore necessary to have that growth based on sound and sustainable foundations and not just on the results of careless easing of requirements for the provision of consumer loans by creditors, which has in many cases been identified as having a negative impact on consumers,” reads the amendment.
The previously existing recommendation has now taken on a binding character and has also been expanded to cover not only banks, but all loan providers.