Financial Crime World

Bank of Albania Imposes Penalty on MCA for Abusive Lending Practices

Background

The Bank of Albania has taken a decisive step in revoking the license of Microfinance Company of Albania (MCA) due to its failure to comply with regulatory requirements and engage in abusive lending practices, posing a risk to financial stability in the country.

Reasons for Revocation

  • MCA’s portfolio consists of 15,942 loans, with around 90% of borrowers having received court decisions or being in the enforcement process.
  • The entity has faced numerous complaints since its licensing in 2016, with 85 cases submitted and handled by the Bank of Albania.

Concerns and Recommendations

  • Issues with the enforcement execution process have been a concern for both banks and borrowers.
  • To address these concerns, the Bank of Albania is recommending several legislative changes, including:
    • Amendments to the Code of Civil Procedure
    • A special law for consumer protection in non-bank financial institutions
    • The transformation of all non-bank financial institutions into joint stock companies

Response from Stakeholders

  • The Albanian Association of Banks and the National Chamber of Bailiffs have welcomed the Bank of Albania’s decision, expressing support for efforts to improve the enforcement execution process and protect consumers from abusive practices.

Importance of Transparency and Financial Stability

  • The Bank of Albania is committed to transparency and remains ready to provide information to the public, media, and other stakeholders on its regulatory activities.
  • The institution has acted in full compliance with legal obligations, guided by its mandate to safeguard financial stability in Albania.

Conclusion

The revocation of MCA’s license aims to protect borrowers from predatory practices and prevent further damage to the banking system. It is essential to ensure that citizens’ savings are not put at risk and that financial stability is maintained in Albania. The Bank of Albania’s decision has been welcomed by stakeholders, and its commitment to transparency and regulatory activities will continue to safeguard financial stability in the country.