When it came to changes in the Credit Institutions Act, the most attention of the public was attracted by counter-current loans (so-called overdrafts), variable interest rates on loans and loans related to the currency clause. On 1 August 2013, banks were forced to adjust their operations in accordance with the Law on Amendments to the Credit Institutions Act (Official Gazette 54/2013). Highlights of the most exciting changes for citizens. Middle exchange rate of the Good Finance Bank
Loans contracted with a foreign currency clause are paid
Banks must use the ABC midpoint exchange rate deposit facility to contract with consumers. Loans contracted with a foreign currency clause are paid / paid in USD using the middle exchange rate of the ABC against the contracted foreign currency on the date of payment or settlement.
Deposits contracted with the foreign exchange clause are paid / paid in USD using the middle exchange rate of the ABC against the contracted foreign currency on the date of payment or payment. In this way, the exchange rate risk, which depends on the movement of the currency in which the currency clause is denominated against the Dollars, is hedged against the prediction and influence of either party to the exchange rate, which could result in a change in the amount of the liability in question or rights expressed in Dollars equivalent.
In simplified terms, if the loan is linked to a foreign currency clause, the bank repays the Dollars loan translated at the ABC middle exchange rate on the day of the loan, and customers also repay annuities translated at the ABC middle rate on the annuity payment date.
Given that it is permissible to exceed the types of non-purpose short-term credit that a current account user can use (when needed) up to the maximum limit, this credit has been added and explained in the catalog of each of the banks in the Republic of Croatia, either in written offices or on the website. The catalog explains the interest rates and fees on this form of loan.
The legislation defines the criteria according to which banks determine the maximum possible amount of overdraft, and within the stated amount, the bank determines the limit of the allowed overdraft with regard to the solvency and orderliness of the client’s operations. The allowed overdraft is usually granted for a period of six months (with the practice of further renewal in subsequent periods). In this case, the new overdraft amount depends on the regularity and amount of current account inflows in the last six months, which means that it may be higher or lower than before.
The fee for using the overdraft is included in the total current account management fee and is paid by the user regardless of whether they use the overdraft. The contractual interest rate on the overdraft is a fixed nominal annual interest rate, calculated on a monthly basis on the amount of the overdraft allowed. Interest rates on the utilized amount of the overdraft facility are among the highest in bank loans and are only slightly lower than the legal maximum of 12%.
Interest is due on the last day of the calendar month and is charged to your current account. The effective interest rate is equal to the nominal one. So far, no more rigorous regulation has been put in place that would force banks to notify a customer of a reduction or cancellation of a minus at least 30 days earlier and allow him to repay a installment (12 months) of the amount for which the minus is reduced or the entire amount if the minus is abolished.
The catalogs of bank branches and websites must explain the terms nominal and effective interest rates and the parameters for changing the interest rate must be known and clear to the consumer in advance. If there is an increase in the variable interest rate, the bank is obliged to notify the borrower at least 15 days earlier, with the possibility that the borrower can repay the loan early without 3 days without notice for early repayment.
The introduction of new fees after the conclusion of the loan agreement is prohibited. For the duration of the contractual relationship, the bank cannot charge interest that was not included in the catalog. Interest and fees in the deposit and credit business are available at the outlets and on the Internet. Interest on demand deposits is calculated monthly by the bank and credited to the deposit at the end of the calendar year, that is, at the close of the deposit.
The amendments to the Credit Institutions Act introduced some other changes.
- Banks are obliged to inform the client once a year about the status of their loans by mail to the client’s address or to the bank branch, by mobile or telephone banking, in a manner in accordance with the regulations of the Republic of Croatia.
- The Bank has the right, but not the obligation, in the event that outstanding arrears have been recorded, to notify the client of the submitted request to initiate debt collection.
- Banks deposit interest on loans in accordance with the Catalog.
- In the case of mortgage and home loans, the client is not obliged to provide an audit of the real estate value assessment at the request of the bank, but is only obliged to enable the bank to do so. Valuation of the property is also done in the case of new construction.
- The number and type of loans by which banks allow and approve a grace period is limited.
- The limit for daily withdrawal of funds from a savings account at branches of other institutions is determined by the institutions themselves.
- If the revocation of the power of attorney for any of the banking products is made outside the bank, it need not be certified by a domestic or foreign competent authority.
- Changes have been made to the conditions of disposal of funds of minors and persons partially or completely deprived of legal capacity. By presenting a term deposit agreement or an appropriate identification document, parents can independently and individually dispose of the funds, regardless of which parent has entered into a contract with the bank.