KNF issues Recommendation T

2010-03-02

The Polish Financial Supervision Authority (KNF) issued Recommendation T with guidelines for banking institutions for, among others, advancing loans.
In the opinion of the KNF, the document is a compilation of best practices in the realm of retail lending, based on thorough research of creditworthiness. The document contains recommendations for management, collateral, risk, reporting, internal audit, and customer relations.
Pursuant to the provisions of the recommendation, in assessing a given client’s creditworthiness, banks should assume a safe risk level. Thus, a loan installment should not exceed 50% of the income for a person with average income and 65% for a higher earner. Banks are to follow a defined lending policy, which will account for such things as the cyclical nature of the economy and its impact on loan repayment. In line with Recommendation T, banks have been obliged to inform their clients about the possible risk (especially in the case of non-PLN loans) and all costs related to contracting prior to the execution of the loan agreement.

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