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Romania Ctrl Bk: Pawnshops Not Allowed To Grant Loans With Realty Assets As Collateral

Pawnshops in Romania are allowed to accept only movables as collateral for the loans they grant, and the pawns will be kept until the loan is paid back, the central bank said Wednesday, in response to media information alleging several pawnshops grant loans with real estate assets used as collateral.
Romania Ctrl Bk: Pawnshops Not Allowed To Grant Loans With Realty Assets As Collateral
13 ian. 2010, 15:05, English

„The minimum requirements for access to lending and its legal framework in Romania are regulated via Law no. 93/2009 regarding non-banking financial institutions, which stipulates the lending activity unfolded by pawnshops will consist only in «granting secured loans with items of personal property kept as collateral», which implicitly restricts the categories of pawns accepted as collateral for the loans granted by pawnshops, and pawns can be accepted and kept by the pawnbroker until the loan is paid back,” the central bank said in a press release.

Under the Civil Code, „the pawn deal is based on a contract whereby the pawner offers the pawnbroker a personal item used as collateral,” therefore, pawnshops shall not accept real estate assets, namely land plots or constructions, as collateral.

The central bank said recent information in the media alleged several non-banking financial institutions, such as pawnshops, grant loans with real estate assets used as collateral, and these operations are presented as „perfectly legal.”