Bulgarian Banks May Drop Fee on Pre-Term Credit Payment

If the parliament adopts the amendments to the Credit Institutions Act, people who pay their credit early will no longer pay fees to the banks. Photo by BGNES

People who pay their credit early will no longer pay fees to the bank, according to amendments to the Bulgarian Credit Institutions Act.

The amendments have been presented by MPs from Bulgaria's ruling party GERB and are expected to be voted in the parliament.

The relief concerns mortgage, business loans and other non-consumer credit, which have already dropped the fee.

If the parliament adopts the amendments at second reading, the bank will not be allowed to impose a fee on people who return their credits early in the following cases: if the interest is not fixed, if the loan is repaid in equal annuities, if the repayment is based on insurance contract whose objective was to secure the payment of the loan, and if it regards an overdraft.

In November, the parliament obliged banks to inform their clients about changes in their loan interest or in fees, which could lead to an increase of the installment of a credit that is non-consumer.

Banks were also obliged to inform their clients before the changes come into force.

According to data from the Bulgarian National Bank, a total of 18.1% of all loans are bad or restructures. The percentage of non-performing loans is an absolute record for the banking system.

In January, bad credits increased by 1.5%, compared to December 2010, the data showed.

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