Jorgovanka Tabaković, the Governor of the National Bank of Serbia (NBS), announced that the Draft Law on the Protection of Users of Financial Services includes interest rate caps on various types of loans, including home loans, consumer loans, credit cards and overdrafts. This legislation is designed to prevent excessive interest rates, protect consumers, and slow down interest rate increases during periods of economic instability, such as the sharp rise in rates seen in 2022 and 2023.
Key proposals include limiting the interest rate on housing loans to the average weighted rate plus a margin, with specific transitional periods. The first period, during 2025, will cap rates at 5% above the current average for both variable and fixed-rate housing loans. In 2026-2027, the rate will be capped at the average rate plus 20%. These measures aim to ensure gradual adaptation to market conditions while maintaining market functionality.
Additionally, interest rates on credit cards, permitted, and unauthorized overdrafts will be capped at 17.75% and 19.75%, respectively. Fuel and consumer loan rates will be limited to 14.75% (effective rate of 15.75%).
Tabaković also highlighted that banks will be required to offer options to borrowers facing repayment issues, such as allowing them to sell their property within 60 days to settle debts or transfer property ownership to the bank to clear the loan.
In another legislative update, Tabaković discussed the formation of a Bank Restructuring Fund to protect public assets and prevent taxpayer burden in case of bank rescues. The NBS will also gain enhanced supervisory powers to oversee corporate governance, money laundering risk management, and compliance with international standards.
The proposed amendments to the Law on Banks, the Law on Foreign Exchange Operations, and the Law on NBS aim to improve the regulatory framework, enhance financial stability, and strengthen NBS’s role in financial oversight.
Finally, the Serbian Parliament also adopted proposals related to providing guarantees for “Srbijagas” for various infrastructure projects, including the construction of gas distribution pipelines and transfer stations.
