Romania Amends Loan Repayment Decree to Eliminate Additional Interest

Borrowers may contact their banks to postpone loan repayments throughout a 45-day period once the decree is published in the country’s official journal.

The initial decree was adopted last week but the government withdrew it to include clarifications after associations protecting consumers’ interests in relation with banks criticized it saying it favored the banking system only and saddled private individuals in financial distress with additional interest.

“Interest due for the repayment suspension period will be calculated under provisions of individual loan contracts and will represent a distinct receivable. Interest for this receivable will be 0%,” finance minister Florin Citu explained.

The minster added borrowers with outstanding loan repayments must first pay off their outstanding debt to benefit from the decree.

Banks operating in Romania said Monday a general moratorium on loan repayments may weaken the system’s liquidity. Banks said case-by-case approaches for both individual and corporate customers affected by the pandemic would be a fairer and more efficient approach.

They said allowing all customers to postpone bank loan repayments for up to nine months could lead to an unfair allocation of resources in the banking system and hurt the economy’s chances of recovery.