Foreign currency loans could be restricted

These measures would affect especially clients with income in lei who want to borrow funds in another currency. However, the main causes are the turmoil on financial markets and a spectacular rise in foreign currency loans to individuals in recent years. Furthermore, international rating agency Fitch downgraded the local banking system to high risk because of this rise in foreign currency loans.

BNR Governor Mugur Isarescu supports the measure, proposed recently by several bankers. “The banking system has a duty to protect clients. In this sense, we are not neglecting the fact that, in many cases, the degree of indebtedness of some clients exceeds their income, and we must consider that most income rises are in lei, meaning that foreign currency debt often rises to a risky level,” former BCR head, Nicolae Danila, currently a member of the Romanian Academy of Scientists, told Business Standard.

Foreign currency loans granted to individuals rose 142.3 percent year-on-year this February, up to €11.6 billion.