Bulgaria's Finance Ministry has drafted a package of legislative amendments that would tighten the regulation of fees charged by banks and loan interest rates, saying that it wanted to make lending more transparent and predictable for bank customers.

Bulgarian banks generally calculate their basis interest rates using internal formulas that are not made public, a fact that has lead to growing public resentment and demands by populist politicians for the state to intervene directly to set interest rates in the banking sector.

The Finance Ministry's proposal envisions banks using a common basis for their interest rates, whether the euro zone's Euribor or the local Sofibor inter-bank interest reference rates.
 
Concerning bank fees, Dyankov told public broadcaster Bulgarian National Television that the Finance Ministry wished to simplify the system.

"A large number of the fees now charged by the banks are paid in full by the customer; we will either outlaw them or regulate that the costs are split between the bank and the loan recipient, so that loans become cheaper and because it is fair," he said.

One example given by Dyankov is the assessment fee that banks charge applicants for mortgage loans, which is currently paid entirely by the applicant, even though the housing is used as collateral to receive the loan.

The regulation will also be expanded to cover popular small consumer loans of under 400 leva – there were an estimated 500 000 loans of under 400 leva in 2011, according to Dyankov. This is expected to eliminate loopholes for usury.

The package will be discussed with the Association of Bulgarian Banks before the amendments are submitted to Parliament.

On February 10, after meeting Bulgarian National Bank governor Ivan Iskrov, President Rossen Plevneliev said he supported the regulation of small loans but expressed reservations concerning any attempt to legislate interest rates.

He said that he expected the Finance Ministry to prepare a detailed and reasoned explanation of its proposal and said he was prepared host a discussion on the issue, with the widest participation of interested parties.

Asked to comment, Iskrov declined to do so but said that the central bank was always ready to provide input when the Cabinet asked its opinion on the matter.