Action for Social Justice (ASP) recommended that the Ministry of Finance consider the model of introducing a maximum interest rate for loans not only from banks, but also from other entities that lend money, such as microcredit institutions.
The ASP said that the recommendation is aimed at protecting loan users from the huge interest rates to which they have been exposed for many years.
"While the Ministry of Finance today ends the public debate on amendments to the Law on Credit Institutions, citizens and the economy remain the problem of high interest rates that are dictated by banks without limits in order to obtain the highest possible earnings," the announcement states.
In support of the huge revenues in the banking system, there is the fact that at the end of last year, eight banks operating in Montenegro showed a total of 230 million euros in undistributed profits, and three reported the payment of dividends totaling around 26 million.
"The current average effective interest rate, i.e. all loan costs, at banks is around seven percent, while at microcredit institutions it is a little over an unbelievable 20 percent, so the question arises whether this is green interest. At the same time, banks have huge amounts of money that citizens and the economy keep with them, and the interest on these deposits is very low and on average up to 0,5 percent, or slightly more for commercial companies," ASP said.
This difference between the interest rates when they lend money and the interest rates granted by financial institutions when they lend money is one of the parameters that should be used when determining the upper limit for interest rates, along with other parameters that are dictated not only by the domestic, but partly also by the European banking market.
The ASP indicated that the maximum interest rate should be reasonable and optimal, not green-handed and enormously profiteering, and it should be defined by mutual agreement with the involvement of all interested entities, and it should be prescribed either through a separate chapter of the Law on Credit Institutions, or through parallel amendments to the Law on Obligations, where certain provisions on loan agreements are already partly found.
"The recent Bill on interest for consumer loans, which is in the parliamentary procedure, is not enough to protect citizens and the economy from excessive interest rates. Namely, it refers only to consumer loans, while at the same time it ties the highest interest rate to the average effective interest rate increased by 100 percent," ASP said.
When it is taken into account that, for the sake of example, the current effective interest rate at banks is around seven percent, the maximum would be up to 14 percent, which is certainly in favor of the banking sector, and not the citizens and economy of Montenegro. Therefore, the Government must offer solutions that protect the public interest, not profiteers.
As part of the recommendations, the ASP proposed to legally define ownership in Montenegrin banks to be completely transparent, and domestic credit institutions should be legally obliged to show as ultimate owners individuals who generate income from that ownership, with the aim of increasing the transparency of ownership and thus greater control. origin of money.
"At the moment, there are examples in Montenegro where the ultimate owners are hidden behind companies registered in offshore zones or behind account custodians, but also opposite examples where the ultimate ownership is more or less transparent, that is, known," the NGO concluded.
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