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Ekonomia

Scandals with microfinance institutions, BoA suspends two companies, 7 more in monitoring for credit abuses

Scandals with microfinance institutions, BoA suspends two companies, 7 more in

The Bank of Albania has suspended some of the institutions that are robbing the citizens through loans with very high interest rates. From the frequent scandals that have been published with non-bank institutions in 2020, the BoA has been set in motion and has launched in-depth investigations against these institutions. In the annual report submitted to the Assembly, the BoA shows that from the conducted investigations, numerous violations and lack of transparency towards clients have been noticed, which have brought great value damage to the citizens. Therefore, the Bank has decided to take administrative measures against them, until the process is suspended or the license for two of the microfinance institutions in the country is revoked. "An important part of the examinations and a very tangible issue in the case of non-bank entities is the assessment of the level of transparency with customers. Examinations have identified several problems in this regard, which have been addressed through recommendations to entities, but also through initiatives to change and improve the regulatory and supervisory framework covering issues of transparency and consumer protection. "Based on the conclusions of the examinations, in two cases measures have been taken to suspend the activity or revoke the license of non-bank entities", the report states. These types of institutions mostly abuse the credit rules and rate, therefore the BoA has focused its control on this element. During the audits, the bank found that some of them follow fraudulent schemes and do not even apply the established criteria, thus violating fair competition in the market. "In the category of non-bank financial entities, The focus during 2020 was on those entities that conduct lending, financial leasing and microcredit. "A good part of the examinations aimed to address alerts for fraudulent events, non-implementation of supervisory recommendations or alerts for market distortions", the report states.

Monitoring continues for 2021

In the year left behind, the BoA has supervised 7 microfinance institutions and in all of them has identified deteriorations in the loan instrument, therefore it has decided to continue monitoring them throughout 2021. The Bank finds that it may have given many violations and deteriorations on credit from these institutions, but which may be kept secret. Therefore, a more in-depth investigation this year would shed more light on what is suspected. "During 2020, 7 non-bank financial entities were inspected. All the examinations carried out had in their objective the credit risk in line with the approach of the European supervisory authorities - dictated by the nature of the regulatory relief undertaken. The aim was to identify potential deteriorations in loan portfolios, which may be temporarily “hidden” due to regulatory easing, as well as immediate measures being taken to create the necessary reserves in advance. While it is seen reasonable for these institutions to be monitored throughout 2021 ", reports the BoA. The Bank has indicated that more and more on-site inspections are being carried out, in order to catch in time the violations found, thus preventing further fraud and theft of citizens. The bank clarifies that so far most of them have been warned or fined, but there will be no more tolerance. "In this context, the number of inspections in the country has increased, with a special focus on issues of terrorist financing and implementation of international sanctions, especially for non-bank financial entities and foreign exchange offices.