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15 Apr 2013

On March 19, 2013 the Board of the Bank of Lithuania approved the Regulations for evaluation of consumer credit borrowers’ solvency and responsible lending, setting up strict requirements for issuing consumer credits. The aim of these Regulations is to promote the practice of responsible consumer credit lending, to establish the basic provisions and principles which consumer credit lenders must follow in evaluating the consumer credit borrowers’ solvency.

The income, expenses and financial obligations of the borrower of consumer credit are described in the Regulations as the income, expenses and financial obligations of his family. The family is defined as married persons and their minor children.
The credit grantor must assess the borrower's financial condition, his capability to undertake the financial obligation, which, together with his other existing financial obligations, he would be able to fulfil. Other factors, which may affect the solvency of the borrower of consumer credit, such as his income, credit history, potential changes in income, etc. must also be assessed. The information collected should substantiate the assumption that the borrower of consumer credit will be capable of fulfilling its financial obligations through the entire term of consumer credit agreement.
Regulations also provide that personal financial obligations shall not exceed 40 percent of consumer credit borrower’s income. The decision to provide consumer credit shall also be taken by the consumer credit grantor considering the average of at least four months of consumer credit borrower’s income history. The balance of borrower’s income after the payment of fees for the consumer credit received and fulfilment of other financial obligations must also be taken into consideration.
These new requirements will come into force as of 1st of July, 2013.
The full text of the Regulations for evaluation of consumer credit borrowers’ solvency and responsible lending can be found here.

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