Bulgarian National Bank Consults ECB on Fast Cash Loan Firms
The Bulgarian National Bank (BNB) has consulted the European Central bank on oversight of companies offering quick loans of up to BGN 400, according to socialist MP Rumen Gechev.
In an interview for Pressa daily, Gechev informed that BNB had also asked whether it could
Fast cash loan companies are not regulated by BNB under Bulgaria's existing legislation and the law only requires that they be registered with the BNB.
The only requirements regarding fast cash loan companies are a minimum amount of capital to be paid up of BGN 250 000 and the submission of quarterly financial reports for statistical purposes.
Bulgarian MPs intend to tighten regulations on non-banking institutions, introducing a licensing regime and a minimum capital of BGN 5 M.
Yordan Tsonev, Chair of the parliamentary budget committee, assured that the Bulgarian Socialist Paty (BSP) would coordinate its ideas with all competent bodies before submitting them to Parliament.
Colleagues of Tsonev, however, explained that BNB was unwilling to issue permits to these companies and insisted that this activity had to be carried out by the Financial Supervision Committee.
The dispute caused Bulgaria to request information from the ECB, including the matter of regulating interest rate ceilings.
According to Pressa daily, there are two options for the interest rate ceiling, including setting a maximum percentage or stating that the interest rate cannot exceed twice the average market rate.
"BNB does not usually publish its correspondence with Bulgarian or EU institutions. When we have something to say, we will state it clearly and openly," BNB Spokesperson Alexander Urumov declared.
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Unregulated fast loan companies are very dangerous precisely because they are unregulated. They can slap on any interest rate they please and have left many poor people much worse off, living from one payday to the next just to pay off the loans and the interest