For a loan of up to 200 thousand lek, a borrower from a bank or microfinance institution will pay a maximum interest rate of 70.9 percent, down from 95.19 percent at the end of January. So, if a citizen takes out a 200 thousand lek loan, he will have to repay a maximum of 341 thousand 800 lek. The Bank of Albania has updated the interest rate ceilings for consumer loans.
"There are several reasons that have influenced this decision-making. In addition to the scandal that occurred with the abuses. First of all, it is the economic situation. The Bank of Albania is trying to keep these institutions under control, which have often been accused of abuse. The bank is trying to keep the profit margins of microfinance under control," says Igli Tola, an expert on the economy.
Meanwhile, for amounts from 200,100 to 600,000 lekë, it will be 36.55 percent from 37.43 percent. The new ceilings determine that for loans from 600,100 to 2 million lekë, the maximum interest rate becomes 17.76 percent from 16.2 percent. The Bank of Albania has also determined that the maximum rate is 11.84 percent for amounts from 2 to 10 million lekë, writes A2 CNN.
The maximum interest rates have also changed for overdrafts, the second most common form of borrowing which is generally linked to an individual's salary. For amounts up to 200 thousand lekë, the maximum interest rate will be 18.54 percent, while for those up to 600 thousand lekë, 18.5 percent.
"We understand that microfinance companies also have costs because the funds they have are more expensive, but there have been many abuses. Also, having somewhat more acceptable interest rates encourages citizens who need to take out loans. Consequently, this brings more consumption and circulation in the local economy," says the expert.
The Bank of Albania approved the ceiling interest rates for consumer loans at the end of 2021. The decision of the Bank of Albania came as a result of numerous reports of abuses with interest rates given by non-bank financial institutions that were also confirmed by investigations by the Tirana Prosecutor's Office. In response, the Bank of Albania revoked the licenses of the companies Micro Credit Albania and FINAL. (A2 Televizion)
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