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Tuesday, 20 January, 2009
Almost half a year after it came into force, Bulgaria’s student lending scheme is still idle as the global financial turmoil makes banks increasingly cautious, Education Minister Daniel Valchev said. The Association of Banks in Bulgaria, on the other hand, says the ministry is dragging out the approval of a model contract lenders will sign with the minister over student loans they make.
Last week Mr. Valchev threatened a state lending agency will be set up and banks will “be over with” unless they start giving out loans to students by March 1. The agency could start off with BGN 10 million now earmarked for loan guarantees.
It is still not estimated how many students will be able to take loans if they came from the state. The bank association helped the ministry work out the model contract to make sure it gets lenders’ support, said the association’s chief secretary, Irina Martseva without elaborating further.
Banks warned during discussions of the bill that the system may fail over the mechanisms for triggering the state guarantee on bad loans. The law stipulates that the state guarantees the loan only after lenders have gone all the way to make the borrower pay back. Other bones of contention were the state premium on loan servicing and the interest rate.
Source: http://news.dnevnik.bg/