October 18 (SeeNews) - Romania's central bank said on Thursday it has modified its regulation concerning the limits on lending to individuals, aiming to simplify households' access to credit and consolidate the sustainable growth in lending.
According to the new provisions, to become effective from the beginning of next year, the maximum level of indebtedness shall be 40% of the net income for leu-denominated loans and 20% for foreign currency loans, starting January 1, 2019, the central bank said in a press release.
The level of indebtedness is the ratio of monthly debt service to monthly net income.
Also, the maximum indebtedness threshold will be increased by 5 percentage points for loans for first home acquired by a borrower.
The amendments to the lending regulations are also aimed at "safeguarding average and below-average income earners by improving their payment capacity in order to support sound lending."
The new regulations shall apply to banks and non-banking financial institutions alike.
Similar prudential measures have already been adopted in other countries such as Hungary, Poland, Estonia, Lithuania and the Czech Republic, the Romanian central bank said.