21:43 / 08.09.2021.

Author: Katja Miličić

PM and bankers address overdrafts that 840 thousand Croatians have in checking

Finance Minister Zdravko Marić

Finance Minister Zdravko Marić

Foto: Patrik Macek / PIXSELL

Prime Minister Andrej Plenković and Finance Minister Zdravko Marić met with bankers and the head of Croatia's central bank on Wednesday to discuss how to regulate tacit overdrafts. 

Some bank customers have authorized overdrafts but banks often carry out tacit overdrafts where there is no prior agreement with the customer, who often has no idea under what terms the transaction is taking place. Tacit overdrafts have become a major issue affecting more than 800 thousand Croatians who have overdrafted on their checking accounts. In 95% of cases, the overdrafts are tacit, said Minister Marić. He pledged that whatever solution is found, authorized overdrafts will be left intact.


"The intention is not to move toward a drastic solution or one that would lead to abolishing overdrafts and would put more pressure on customers and their financial wellbeing. We would we support such a proposal," said Marić.


What appears to be certain is that tacit overdrafts with very high interest rates will be replaced by authorized overdrafts. When legislation regulating overdrafts was passed in 2010 it allowed both kinds of overdrafts. However, since 2018, tacit overdrafts have become predominant, accounting for nearly all overdrafts. Marić said the idea was to reverse those numbers so that authorized overdrafts are the norm not the other way around.


“No less important is administering the price. We must ensure customers are informed, the process is fully transparent, simple, and easy for customers to understand. It requires less administration, which ends up costing both the customer and the bank,” Marić said. 


Croatian National Bank Governor Boris Vujčić said the meeting was constructive. In 2020, the central bank received several consumer complaints, so they conducted a survey of banks and found that many consumers migrated quickly from the permitted to the tacit overdraft.


“We must regulate this to ensure the same type of regulation for tacit overdraft as for authorized overdraft,” said Vujčić.


“It was great that we were able to convey the experiences from other countries to the Prime Minister, his colleagues and the Governor because the Croatian banking system is internationalized. How it is done in other countries, what are the possible limitations and what is the practice, were all discussed. I am glad that we can work on a solution that will satisfy all parties and ultimately improve consumer protection,” said the president of the Croatian Association of Banks, Zdenko Adrović.


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