More than one million citizens have signed contracts for authorised overdrafts. That is 58% of 1.75 million proposals sent to bank account holders for the transition from tacitly accepted to authorised overdrafts, the Croatian National Bank (HNB) reported on Tuesday.

At the end of June, the process of switching from one type of overdraft to the other was completed. This is in line with an agreement on current account overdrafts signed on 22 July 2022 by the government, the HNB and 13 commercial lenders.

Based on the information obtained from the banks that signed the memorandum, it was found that by 1 July 2024, just over one million citizens had signed contracts for the approved overdraft facilities, or 58% of 1.75 million proposals forwarded to customers.

Better regulated and more affordable product

Of these million citizens who signed the contract, around 450,000 used the approved overdraft in accordance with the contract on 1 July 2024.

At a press conference on the occasion of the signing of the memorandum, Finance Minister Marko Primorac said that tacit overdraft on current accounts has become a dominant product on the banking market in recent years, adding that these facilities were poorly regulated and more expensive for customers. The memorandum will ensure a better regulated and more affordable product, he emphasised at the time.

Customers will have the option to repay the amount due for tacit overdrafts in instalments at the interest rate applicable to agreed overdrafts.

Only a few banks have decided to retain the option of tacit overdrafts, albeit limited to the amount of the average monthly income of the account holder concerned.