Business News

Ministry Liberalising Use of Bank Loans as Collateral

Ljubljana, 14 February (STA) - The Justice Ministry presented on Monday a draft bill on financial collateral, which lifts certain restrictions to using bank loans as a means of financial collateral. In line with EU directives, the move is meant to boost crediting, although Slovenia is not ready to include consumer loans in the scheme.

"The goal of the changes to the act is related to the endeavours of the entire EU to encourage loans to the economy. The credit crunch is a significant obstacle to furthering economic development," Justice Minister Ales Zalar told the press in Ljubljana.

Bank loans have been part of the loan insurance scheme in Slovenia along with financial instruments and cash since 2007. The changes transpose into Slovenian law a directive aimed to secure uniform EU-wide conditions for insurance through bank loans, among other things.

The changes eliminate the condition of registering such collateral with a delegated institution and of notifying the borrower that a transfer of his debt onto another party had occurred.

Meanwhile, the ministry figured that consumers will be better protected if Slovenia uses the opt-out possibility when it comes to consumer loans. These will remain outside the loan insurance scheme.

"We were cautious enough not to expose consumer loans to free circulation related to loan insurance schemes used by financial institutions," Zalar said.

He reiterated that securing credit to business, which urgently needs it, was the main goal of the changes and that the "financial sector obviously needs certain incentives for this to happen".

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