According to Mugur Isarescu, governor of the National Bank of Romania (BNR), 44 percent of the 3,907 notifications submitted to banks by 20 July 2016 were not in connection to bad loans. Out of the total notifications, 2634 were contested.
We have a total of 3,907 debt discharge notifications on 20 July, out of which 2,634 were contested by the banks, meaning 67.4 percent, Isarescu announced. “The law did not give us the possibility, nor did it compel us to collect statistical data. The information are based exclusively on reports of banks submitted at the request of the National Bank of Romania,” Isarescu explained.
According to Isarescu, 404 debtors submitted more than two debt discharge notifications, that is why, the number of debtors is smaller than the total number of notifications, namely 3,398 debtors, most of which submitted notifications for one loan.
The BNR governor also stated that the total value of the credits notified, RON 1.13 billion represents 1 percent of the total of loans to households and 2 percent from real mortgage loans. Isarescu also stated that 56 percent of notifications are related to loans with delays of more than 90 days, and 44 percent were not and are not in danger to become bad loans. In most cases, Isarescu added, the outstanding loan is higher than the value of the real estate collateral. Namely, “there is a clear motivation to discharge the debt because the value of the house was smaller than the value of the loan and the debtor was motivated to conduct this operation. A total of 64 percent of notifications and 75 of the total notifications, Isarescu explained.
Most loans that were subject to the debt discharge law have a value of approximately RON 300,000, the BNR governor stated.
The debt discharge law was published on 28 April and entered force on 13 May 2016.