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Bank association to discuss new loan prepayment rules

Friday, Jan 09, 2009

The Association of Banks in Bulgaria may call for an interpretation of the new loan act scrapping the prepayment fee without specifying whether both existing and new consumer loans are concerned, ABB chief secretary Irina Martseva told Dnevnik.

The law, amended at the very end of last year, stipulates that loan borrowers shall be charged zero interest, fees or any other costs for early repayment.

The fuzzy rule, however, has prompted banks to make their own interpretation as to which loans it applies to. DSK Bank, UBB, Postbank and Allianz Bank Bulgaria are treating all consumer loans in compliance with the new law.

Bankers further complained that they have not been given the time to rework internal rules and spread the new requirements around all offices.

Market sources commented that lenders are already waiving loan prepayment penalties as competition in the sector heats up.

They warned banks may raise other fees and loan interest rates to cover costs they will incur from advance repayment.

Source: Dnevnik a.m.