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Wednesday, April 24, 2024

Loans for farmers. Two projects in the Sejm

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On Thursday, the Sejm submitted two bills to the Agriculture Committee aimed at excluding financing for farmers running farms from the protection of the Consumer Credit Act.

On Thursday, the Sejm read two draft laws regarding loans for farmers: a parliamentary bill amending the Act on Consumer Lombard Loans and amending certain other acts, and a government bill amending the Civil Code and the Consumer Credit Act. Both bills were referred to the Agriculture and Rural Development Committee. Both the parliamentary bill and the government bill have the same goal – it is about: abolition of consumer protection in the case of loans granted to farmers for their business activities.

“Throwback” from the former team

– Farmers, especially commercial farms, were included in consumer protection a year ago, in April 2023. At that time, a parliamentary ‘instrument’ into the Act on Consumer Lombard Loans recognized farmers as consumers, although they were still covered by such protection when concluding loans for household appliances. As a result, since January 7, we have a situation in which agricultural farms are deprived of access to financing in 70 percent of cooperative banks and 30 percent in commercial banks. Banks have suspended lending because they would have to grant loans at much higher costs than before, said Marek Sawicki, a member of parliament from the Polish People’s Party-Third Way, who presented the bill on behalf of the applicants on Thursday. Sawicki emphasized that currently there are also restrictions in the case of preferential loans for farmers. Deputy Minister of Finance Jurand Drop, who presented the government project, stated that it has the same goal as the parliamentary project – maintaining continuity of financing of agricultural activities. – Many agricultural and banking organizations, especially cooperative banks, pointed out that providing farmers with consumer protection led to a limitation in the financing of agricultural production by increasing its costs, increasing bureaucracy and not taking into account the specific nature of loans with public support, which resulted in a limitation in the acceptance of loan applications by banks. The government project proposes changes while maintaining reasonable protection of farmers as consumers, he said.

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What is the difference between a government bill and a parliamentary bill?

The government project aims to eliminate loans granted to farmers running a business under the Consumer Credit Act, as well as to delete the provisions from the Civil Code under which farmers are protected against prohibited contractual provisions. The justification stated that this solution does not take into account the specificity of preferential loans, where many provisions result from the regulations of the programs under which support is granted. In turn, the parliamentary bill not only contains the provisions that are in the government bill, but also eliminates the protection of farmers under the Act on Consumer Lombard Loans – as it relates to pawnshop loans granted to farmers. In addition, the parliamentary bill proposes deleting the provisions under which the limits on loan costs resulting from the anti-usury act apply to loans to farmers.

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