Non-banking financial institutions get OK to disburse mortgage credits

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Under a bill on the organization and functioning of non-banking financial institutions adopted on Aug. 27 by the government, these institutions will be able to disburse mortgage loans and micro-credits, they will be free to finance commercial transactions and perform factoring operations.
 
Non-banking financial institutions (IFN) entered in the General Registry will be able to perform the currency exchange operations required by the activities in their approved scope, under observance of the relevant regulations. The IFNs will also be able to issue cards for several credit types, not only for consumer credits.
The IFNs can also manage public funds made available for micro-credits by governmental agencies.
 
The bill also expands the category of entities IFNs can merge with and the National Bank of Romania will issue auxiliary regulations regarding the procedure for the incorporation of the resulting entity.
However, the IFNs cannot draw in deposits or other kinds of reimbursable funds, they cannot issue bonds – except for the public offerings addressing qualified investors – they cannot carry out operations with assets and securities and neither grant loans conditioned on the sale or acquisition of IFN stake.
 
The National Bank of Romania is the only authority competent for deciding if the activity of a particular entity is a professional lending activity.
The IFNs are required to set up risk-specific collaterals in compliance with BNR regulations.
Non-banking financial institutions can perform credit-granting activities only after they are entered in the BNR General Registry. The establishment of IFNs subject to the entry in the General Registry shall be notified to BNR within 30 days since registration in the Trade Register.
 
BNR also establishes the criteria for IFN registration in the special register. The set of criteria includes the turnover, the amount of credits, the indebtedness degree, the total assets and equity capital.
Mutual aid funds and pawn shops that seek to enter the lending business too, as well as the entities planning to perform credit activities – exclusively from public funds or funds set at their disposition under inter-governmental agreements – are required to register on the Directory.
 
The minimum share capital of IFNs shall not be less than the equivalent in lei of 200,000 euros, respectively three million euros for IFNs that disburse mortgage credits.
The bill slashed the fines applicable to non-banking financial institutions that do not observe BNR regulations from 0.05 – 1% of the institution's share capital to 0.01 – 0.5% of its share capital. The sanction can go as far as to the institution being struck off the Trade Register.
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