The last year’s data on the bank system performance showed that this sector has improved as second tier banks have increased their revenues and profits but the high number of unpaid personal and business loans still remains a problem.
Considering that the allocation of unpaid loans by banks is an impossible mission, the Assembly announced that changes will follow the law on incomes, since the government is trying to consider the deletion of the unpaid loans as deducted fiscal expenditures.
Changes will follow also the “For the administration of loan risk” regulatory by Bank of Albania”, at the articles that define the criteria and conditions when a loan is finally classified as “unpaid/lost loan” and when it should be deleted from a bank’s balance.
The new regulatory entered in force on January 1st of this year and cites that an unpaid loan is considered lost when the respective bank submits at the bailiff the request to commence the process for the obligatory execution of the collateral.
In a situation when a loan is not ensured with collateral, it may be considered a lost loan after the court issues the execution order.
Bank of Albania also announced changes regarding the criteria that a bank needs to meet in deleting an unpaid loan from bank’s balance. According to the new regulatory, a bank cannot update the unpaid loans in its balance for more than three years, exempting the situation when the respective bank provides indicators for the loan repayment, after analyzing the financial situation of the lender and the collateral.
These changes were presented by the Assembly and ease the procedures that second tier banks should follow in deleting the unpaid loans.
News source: ATA
Photo credits: Chris Potter (Flickr)