IMF: Serbia has to reduce the number of NPLs

The IMF insists on the National Bank of Serbia (NBS) to be more aggressive in dealing with non-performing loans (NPL), the Blic finds out.

In the course of the implementation of the current standby arrangement, the IMF wants to see a further reduction in the number of NPLs. On the other hand, economy experts warn that the banks in Serbia engaging in a ruthless fight to win over as many clients as possible by lowering their loan approval criteria could result in the growth of NPLs.

According to the latest data collated by the NBS in late August 2016, corporate NPLs had a 20% share in the overall loan portfolio, while the retail ones had a 10.8% share. When it comes to the latter, the loans indexed in Swiss Francs seem to be the biggest problem because their share is 8.4%.

The data collated by the Association of Serbian Banks, shows that 11.2% of borrowers are late in paying their loans. Small business owners top the list with a 15.7% share, followed by companies (13.2%). Retail borrowers are most regular in paying their loans.

According to economy expert Ljubomir Madzar, the more lax conditions for obtaining loans have their good and bad sides.

“The good side is that they could contribute to the revival of our economy, although I can question that too. What often happens is that you have economic growth over a year or two-year-period and after that, when the money is spent, the growth drastically declines. The negative side is that the number of eligible borrowers is getting higher which automatically increases the chances of having more NPLs” – Madzar explains.

He adds that NPLs are a part of much bigger disarray in our economy.

“The state failed to do one of the most urgent tasks and that is to ensure financial discipline, i.e. to force debtors to settle their financial obligations on time and if they failed to do that, to send them to court in order to have a fast and efficient settlement of debt”, he outlines.

(Blic, 14.11.2016)

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