New banking index for loans
The interest on national currency loans is calculated by Romanian banks based on a new reference index, the IRCC
Daniela Budu, 03.05.2019, 13:04
The National Bank of Romania made public on May
2 a new index for the calculation of interest rates on local currency loans,
which have been calculated so far based on the ROBOR index. The new index was
introduced by Emergency Order no. 19 / 2019, modifying another government
order, 114/2019, which also introduced a charge on banking assets. The new
reference index is the arithmetic mean of the daily interest rates of interbank
transactions in the last quarter of the previous year. For instance, on its
first day, the quarterly reference index for consumer loans was 2.36%, below
the 3-month ROBOR, which stood at 3.22%. The National bank will make public the
new index on a daily basis, and will post an updated value every end of
quarter.
Central bank officials say they cannot make
predictions regarding the new index. Its introduction is supposed to make loans
cheaper, but it all depends on the inflation rate and on the response from the
market, National Bank officials explained. Here is Adrian Vasilescu, the
central bank’s strategy adviser:
This index is variable, and will
reflect current developments in the market, just like a seismic detector. There
is no telling whether it will go up or down. We will see. The National Bank
cannot introduce legislation, so it has not intervened in any way in this new
system of loan granting and repayment, but at the request of the Government we
have made some calculations, given that Order 19 indicates exactly the
methodology for it. So we came up with the calculation formula, the Government
approved it, it has been posted on the website of the Forecast Commission and
is applicable for new loans and for refinancing.
The Central Bank official also explained why
this new index was necessary:
This Order works as follows: a loan
formula uses 2 indicators. One of them is invariable, it is the bank’s margin.
A 3-year loan remains unchanged in terms of the bank margin, but it also needs
a floating indicator, because life brings new circumstances every day or every
week. For those who have already received a loan, and are currently repaying
it, nothing will change, because the measure introduced by Order 19 is not
retroactive. It will be applicable for those who take out new loans or who
refinance older ones, under the conditions agreed with their respective banks.
Another bill is currently pending in
Parliament, which concerns the enforcement of the new banking index for ongoing
loans as well, but MPs are yet to discuss and vote on it.
