National Bank of Serbia cuts banks' reserve requirement for risky loans

The National Bank of Serbia (NBS) decided Monday to lower banks' required reserve ratio for risky loans, NBS Governor Dejan Soskic announced.

The governor explained at a press conference that the new decision on the classification of bank balance sheet assets and off-balance sheet items led to a change in criteria for assessing the credit worthiness of debtors.

That will provide banks with a greater potential for new lendings and easier repayment of old and new loans, while debtors can count on lower interest rates and longer repayment periods, said Soskic.

The governor stressed that NBS would not change its decision on banks' required reserves, adding that banks were liquid enough because they had EUR 1.9 billion on FX accounts and held RSD 125 billion in NBS' repos.

As he pointed out, the adopted novelties will ensure lower costs of bank lending, but no additional liquidity will be pumped into the system in a situation where inflation is
running above the upper bound of the target tolerance band.

As the governor added, that will help maintain the security of household FX deposits.

According to him, these changes will benefit the most the enterprises in the category of medium-risk debtors.

By a decision adopted by NBS, warehouse receipt is acceptable as collateral for agricultural loans.