The Polish Financial Supervision Authority is an institution supervising the functioning of banks in Poland. It issues recommendations that affect, inter alia, the lending policy conducted by banking institutions. One of such recommendations, which refers to for cash loans, is the recommendation of T. How does it affect the issuance of credit decisions by banks?
In 2012, the Polish Financial Supervision Authority adopted an amendment to the recommendation T. The purpose of the changes was to make the banks’ approach to the issue of retail loans more flexible. Banks must adhere to the guidelines of this recommendation, which assumed a departure from establishing by the PFSA top-down the maximum values of the DtI index, ie the relation of expenses related to servicing credit obligations to average net income. Today, the bank determines which level of indebtedness of given clients may be acceptable. Previously, recommendation T stated that the installment of consumer credit, including cash, can not exceed half of the borrower’s income, or 65% of income if the borrower obtained income in an amount higher than the national average.
Currently, banks can also apply simplified rules for assessing the customer’s creditworthiness. Such rules apply to clients of banks with six-month cooperation with a bank for which the cash loan amount does not exceed 6 times the average monthly remuneration in the enterprise sector. Thanks to this, the Polish Financial Supervision Authority opened the opportunity for banks in Poland to grant so-called cash loans as proof. They are competitive in relation to quick loans granted outside the banking system by parabank institutions. Simplified rules for granting cash loans also apply to low loans, for example, not exceeding the average remuneration in the enterprise sector.
However, regardless of the amount of the cash loan, the bank should use external databases each time to assess the creditworthiness and creditworthiness of the retail client.