Even more favourable conditions for loans under the Guarantee Scheme – another NBS measure to bolster economic recovery from the crisis and to power growth

At its extraordinary meeting today, the NBS Executive Board adopted the Decision Amending the Decision on Interest Rates Applied by the National Bank of Serbia in the Implementation of Monetary Policy. 

This decision will make dinar loans approved by banks under the Guarantee Scheme (in accordance with the Decree on the Guarantee Scheme as a Measure of Support to the Economy Aimed at Mitigating the Consequences of the COVID-19 Pandemic Caused by the SARS-CoV-2 Virus) even more favourable.

The NBS aims to help neutralise the negative economic effects of the COVID-19 pandemic and to provide an additional impulse to economic growth. Once this NBS measure is applied, loans in dinars under the Guarantee Scheme will be even more favourable, which should encourage corporate loan demand and thus accelerate GDP growth, i.e. economic recovery in the near term.

Namely, the NBS will pay to banks which approve dinar loans under the Guarantee Scheme at a rate lower than the ceiling rate defined by the Decree the so-called remuneration rate at an interest rate 0.50 pp higher than the standard remuneration rate (rate payable on the amount of allocated required reserves in dinars which currently equals 0.10%). The condition banks must fulfil in order to be eligible for this “preferential” remuneration rate is to approve to their clients dinar loans under the Guarantee Scheme at an interest rate that is at least 0.50 pp lower than the ceiling interest rate envisaged by the Decree for loans extended in dinars (1M BELIBOR+2.5 pp). In this way, the NBS will compensate banks for the 0.50 pp reduction in the interest rate on dinar loans under the Guarantee Scheme, and banks will be able to approve these loans, in line with their business policies, at even more favourable terms. 

In an environment of low and stable inflation and muted inflation expectations, this measure was adopted in support of the government’s economic policy and is an efficient stimulus to banks to step up their lending to the corporate sector under even more favourable conditions.

Owing to this measure, the rates on dinar loans under the Guarantee Scheme will get closer to those on euro loans approved under the same Guarantee Scheme, which is conducive to dinarisation and financial stability.
Banks will be obliged to report to the NBS on the amount of loans under the Guarantee Scheme which they approve “preferentially” and on the interest rates on those loans, which will ensure the control of this mechanism.

Governor's Office