People with a bank overdraft exceeding three times the amount of their monthly salary will be given one year to reduce it to the amount of their average monthly salary, according to legislative amendments to be proposed by the Finance Ministry.
The ministry said on Tuesday it was working on amendments to the Consumer Credit Act and the Credit Institutions Act, adding that the main novelties related to variable interest rates for housing loans and limiting bank overdrafts.
The ministry said that the purpose of limiting bank overdrafts was to prevent people from running up excessive debts, noting that the interest rate which banks charge on overdrawn accounts is only marginally lower than the maximum rate provided under the law.
The Croatian Banking Association (HUB) said it was against limiting bank overdrafts because such a move would encroach upon the freedom of negotiation between clients and banks and the freedom of clients to choose the bank's product that suited them best.
According to the Croatian National Bank (HNB), overdraft lines of credit accounted for HRK 7.2 billion at the end of December 2012, an increase of 4.1% over 2011.
