Vice Governor of the National Bank of Serbia Veselin Pjescic has said he expects efforts to solve the issue of bad loans taking up a 22.9 percent share of all loans in Serbia, because a reduction in the number of uncollectible loans is required for banks to increase their credit activity.
“The thing that encourages us, as well as the ministries of finance and economy, is the willingness to tackle the issue. Close cooperation is possible there in order to release the potential that is trapped in the banking sector at the moment because of the high share of bad loans,” Pjescic told Tanjug and added that it would form the foundation of a new credit growth.
Regarding the announcements that a fund will be created to buy uncollectible loans, he says that the legislation has not been drafted yet.
The intention is to place the creation of the fund formally in the hands of the government, while it would be owned by private companies that would invest in the purchase of uncollectible loans.
“Banks insisted on a principle of responsibility, for them to sell willingly a portion of those uncollectible loans to the fund, and that should be part of the legislation,” Pjescic said at a summit of central bank governors of the region held in Becic, Montenegro.
The Serbian central bank has loosened its regulations a number of times, allowing banks to work towards a reduction of the number of bad loans by letting them sell those loans to other companies, Pjescic pointed out.
“It is already happening and we have cases where some banks have sold a part of their uncollectible loans, thereby reducing their presence in their account balance. It is, however, still not applicable in all banks,” he stated.
Source SerbGov
