If entrepreneurs have had problems accessing loans until now, their situation could soon become even more difficult. Namely, the Croatian National Bank (HNB) will, according to the Draft of proposed amendments to the Decision on the Classification of Loans and Off-Balance Sheet Obligations of Credit Institutions, require greater coverage of banking risks, writes the latest issue of Lider.
According to the new proposal, banks would have to increase the reservation of the principal amount proportionally to the time during which the loans are not being repaid. Specifically, this means that if a debtor is late in repaying loans between 90 and 180 days, the bank will have to reserve between 10 and 30 percent of the principal amount. If the delay exceeds 365 days, the bank will have to reserve the entire principal amount of the loan. The HNB has released this Draft with the intention of protecting itself from a possible disaster in the banking sector, as non-performing loans have reached 14 percent of the total approved loans and continue to grow.
Expert opinions on whether this is a good move or not vary. While some say in an interview with Lider that this will hinder lending to the economy and new business ventures, others believe that such a move could eventually lead to lower interest rates on loans. Regardless, entrepreneurs will still have to seek opportunities for recovery and future growth in their own cash flow.
