At an extraordinary session, the Executive Board of the National Bank of Serbia passed a Decision on supplementing the Decision on Interest Rates, which the NBS applies in the procedure of conducting monetary policy, it is stated in the announcement.
This decision enables dinar loans, which banks grant to clients under the Guarantee Scheme (as measures to support the economy to mitigate the effects of the corona crisis), to be even more favorable.
The NBS will pay to banks that grant dinar loans from the Guarantee Scheme to their clients, at lower interest rates than the maximum rate from the Regulation, the so-called the rate of remuneration at the interest rate which is 0.50 percentage points higher than the standard rate of remuneration, which is paid on the amount of allocated required reserves in dinars and which currently amounts to 0.10 percent.
The condition for banks to be entitled to this “preferential” remuneration rate is to grant their clients dinar loans from the Guarantee Scheme at an interest rate that is at least 0.50 percentage points lower than the maximum interest rate prescribed by the Regulation for loans approved in dinars (1M BELIBOR + 2.5 percentage points).
In this way, the NBS will compensate the banks for the reduction of the interest rate on dinar loans within the Guarantee Scheme in the amount of 0.50 percentage points, and the banks will, in accordance with their business policies, be able to approve them on more favorable terms.
In conditions of low and stable inflation and low inflation expectations, this measure supports the implementation of the economic policy of the Government of Serbia and provides an effective incentive for banks to intensify lending activity to the economy under even more favorable conditions.
In addition, this measure allows the interest rates on dinar loans from the Guarantee Scheme to be closer to the interest rates on euro loans approved in accordance with the same Guarantee Scheme, which is conducive to the dinarization and stability of the financial sector.
Banks will be obliged to report to the NBS on the amount of loans from the Guarantee Scheme that they approve with a “privilege”, as well as on interest rates on those loans, which ensures control over the functioning of this mechanism, the statement said, N1 reports.
