The National Bank of Belarus has imposed a ban on foreign currency lending to individuals
The National Bank of Republic of Belarus has adopted a decree #105 dated July 14, 2009 ‘On amendments and supplements to the Instruction on the procedure of banks’ placement of funds in the form of loans and of their repayment’ #226 dated December 30, 2003 pursuant to which the banks’ and non-bank financial institutions’ lending in foreign currency to individuals (excepting private entrepreneurs) including the overdraft lending by earlier concluded agreements is banned.
In Credit-Rating’s view, a ban imposed on foreign currency lending to individuals will contribute to strengthening banking system in Belarus, since it permits to mitigate risks associated with fluctuations in exchange rates and the possible depreciation of Belarusian rouble will not weigh on obligors’ solvency.
At that the restrictions on foreign currency lending to the population may have negative impact on investments in the banking system, since the currency risks by the resources attracted by banks (including the subsidiaries of foreign financial institutions) are transferred from individuals to the banks.
Over the past 12 months the amount of individuals’ debts denominated in foreign currency rose by 55% and amounted to BYR3646.6bn as at Jul 1, 2009, which is 6.7% of overall loans granted within the economy.
Note:
Established in Kiev in 2001, Credit-Rating has become one of the biggest national rating agencies in the CIS region. The Credit-Rating’s Minsk-based office started its operations in March 2009.
The agency was the first to operate in the Belarusian financial market using National scale of credit ratings. The agency is committed to independent assessment of creditworthiness of obligors/issuers and to assignment of national scale ratings.
For more information, please contact:
Yevgeniy Boury, Chief Executive Officer of Credit-Rating (Minsk).
E.Boury@credit-rating.com.ua
Phone/Fax +375 17209 00 15
