Know your debtors

Following an amendment to the banking law recently ratified by the Sejm, banks will soon be able to store and process the data of clients who have paid off their loans. Doing so will require clients' consent for the storage, which may be withdrawn at any time. The data of loan takers with over 60 days' worth of payments in arrears will be kept for up to twelve years, regardless of their agreement.

The new regulation is expected to improve banks' security and their assessment of the credibility of loan takers.

"So far in assessing their clients' financial capabilities, banks have relied to a large extent on statistics. Having better access to individuals' earlier records will [enable them] to make their decision on more reliable grounds," said Michał Macierzyński, a banking analyst with Bankier.pl. He added that a more objective assessment would also increase the chances of, for example, self-employed individuals and small businesses acquiring loans, to whom banks are often reluctant to grant credit.

Questions regarding the duration and condition of data storage have been at the core of disputes between banks, the Credit Information Office (BIK) and the Bureau of the Inspector General for the Protection of Personal Data (GIODO). The new amendment is expected to regulate this issue. It also complies with an EU directive on credit risk and market discipline designed to protect savers and investors from the risk of bank failure or bankruptcy.

The loan and mortgage market in Poland continues to develop and the Polish Bank Association estimates that the zł.41 billion worth of mortgages that banks granted last year will rise to zł.57 billion in 2007.