Everything should be obvious to borrowers
National Bank gives commercial banks guidance on transparent lending
By Denis Kopylov
Consumer lending rates currently fluctuate between 40 and 50 percent per annum. Taking into account the relatively stable national currency exchange rate, it offers banks good profitability, even after the updates to the Banking Code.
The National Bank has given commercial banks several recommendations, to ensure that borrowers realise the full extent of their commitments. Foremost, banks are being asked to abstain from ‘hidden fees’ of which customers may be unaware. Packaged products sometimes unite more than one service, incurring penalty fees on customers if they redeem any single part. In fact, the National Bank is eager to see more lending in non-cash form and for banks to use clear annual interest rates. It also suggests that services are diversified and that customers are aware of where they are being charged ‘set up’ fees for products. It wishes to see ‘socially responsible behaviour towards banking consumers’ and the creation of loan products with ‘transparent costs’, which are ‘understandable for those without special financial knowledge — ordinary people’.
Plenty of people are taking out loans, despite interest rates remaining quite high. In January, Br2 trillion 172.6 billion was borrowed, against almost Br6.3 trillion, $663 million in savings. Current rates on savings in local currency are certainly attractive.