The monopoly of commercial banks on the Polish financial market ended many years ago. Many Poles were discouraged from institutions in this sector, mainly because of the great difficulty in obtaining a cash loan. Fortunately, commercial banks are not the only organizations where you can take out a cash loan . There are currently many professional loan companies that provide personalized financial products. Unfortunately, many people still mistakenly confuse non-banking loan companies with infamous parabanks. We will try to prove that “parabank” and “loan company” are not synonyms, but two completely different institutions.
Parabank, or “free American” in Polish
According to the Finance Starla Committee, parabank is an institution that offers identical financial products as a traditional commercial bank to both individual clients and institutions, and also collects all deposits. However, such services, according to Polish law, can only be offered by banks and credit and savings banks, and parabank is not one of these institutions.
Parabanks are entities threatened with a very high risk in terms of clients’ financial resources deposited in them. Parabanks often operate as a pyramid scheme. In this type of organization, all offered products and services are fully financed from funds deposited by clients of the parabank, so the consequences associated with the loss of money are borne only by consumers, not the parabank. In addition, the operations of such institutions are not supervised in any way, e.g. by the Polish Financial Supervision Authority , and are not sanctioned by banking law or other provisions of financial law.
The non-banking sector in accordance with Polish law
Loan companies operating on the Polish market are the complete opposite of parabanks. First of all , they operate in accordance with the Act on consumer law , as well as with the provisions of the so-called the Anti-usury Act of 2016. Companies from the non-banking sector offer customers products wholly financed from their own resources, i.e. share capital. It is contributed by the owner or owners of the loan institution, and the company’s share capital cannot be less than PLN 200,000.
The legal regulations concerning loan companies in Poland
It is set certain important requirements for them, e.g. regarding the limits of costs related to loans granted. Such costs may not be greater than 25 percent. the amount of money borrowed and 30% of this commitment per year. During the entire period of the client’s use of the loan, its total cost may not exceed 100%. loan value. Companies from the non-banking sector have been legally obliged to inform customers accurately and comprehensively about all additional costs related to the financial commitment.
These are just some of the most important rules governing the activities of loan companies that guarantee the safety and comfort of borrowing money in the non-banking sector.Such limits and compliance with basic provisions of financial law are in vain to be found in parabanks, in which all rules and costs of granting loans are not subject to any regulations, and depend mainly on the owner of a given parabank.