When approving loans, banks treat citizens worse than companies

The research done by portal kamatica.com shows that, when approving loans, business banks treat citizens worse than companies because the interest rates on the loans for citizens are double or even triple higher than the ones for companies. That is especially visible when the loans are short-term Dinar loans because the annual average interest rate for citizens amounted to about 36% at the end of 2009, while the annual interest rate for companies ranged between 10 and 18%, depending on the purpose of the loan.

Also, during the last year, interest rates for the economy were dropping, while the rates for population were growing. "It is clear that business banks have significantly bigger costs when granting loans to citizens, but such difference between the interest rates can not be justified with that only", say the portal analysts. They remind that 60% of approved loans were granted to the economy, while about 35% were given to citizens. But, although companies can easier pay the installments, the results show that the citizens are more regular payers and that the companies are twice as late as citizens when paying installments.

The research show that the interest rates on short-term loans for population in 2009 were the highest since year 2000. Prior to the last year, they had never exceeded 30%. In 2009, the interest rate was constantly above 30% and even 40% during five months (record level of 57% was registered in February).

It is also estimated that the expected lowering of interest rates on loans in 2010 should not be only the result of the behaviour of the central banking institution in dictating monetary terms, but also greater effectiveness and efficiency of business banks.

Difference between active and passive interests

The research done by portal kamatica.com shows that the difference between the interest that the citizen pay for the loan and the interest that they get for their saving deposits ranges between 3 and 18 times. "No matter how much business banks talk about high reserves stipulated by the National Bank of Serbia, difficult collecting of debts and high risk of the country, there is no excuse good enough for something like that", say the analysts of Kamatica.

Narodna banka Srbije Beograd

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