Parliament voted last Thursday to pass the first reading of an amendment to the Code of Penal Procedures that would relieve bankers granting unsecured credits of criminal prosecution. The amendment was proposed by National Movement Simeon II (NMSII) MP and parliamentary economic policy commission chairman Valeri Dimitrov.

Under the current legislation, adopted after the 1996 mass bankruptcies, bankers who release unsecured credits which later become uncollectable could be sentenced to one to 10 years in prison and declared unfit to staff a government office or practice their profession.

During the debate, United Democratic Forces (UtDF) MPs argued that the amendment will allow the domestic banking system to be siphoned off again. UtDF MP Muravei Radev described the change as "harmful and dangerous."

Yordan Sokolov, another UtDF MP, recalled that 3,700 people received credits that totalled 2.73 billion of old leva from the 16 banks that went bankrupt in 1996. He added he will withdraw his bank deposits if the amendment goes through.

Sokolov also suggested that the ruling majority was trying to secure a financial resource for the fulfillment of election campaign promises of 5,000 leva interest-free credits for small and medium-sized businesses. Dimitrov countered that the crediting scheme that has been devised does not envisage that the banks underwrite any risks to the detriment of the depositors. The banks will act as mere cashiers in the scheme, he said.

Coalition for Bulgaria MP Atanas Paparizov proposed that the economic and budgetary policy committees draft a package of legislative amendments to other laws that will facilitate lending. He emphasized the need for better protection of the rights of minority shareholders and the loophole that allows the foreign parent company to extend loans to subsidiaries in Bulgaria at interest rates higher than those in the parent company's country of origin.

Dimitrov said that the current legislation provides enough deterrents for ill-meaning bankers and that the leading role in this respect is played by the Bulgarian National Bank's supervision exercises. The support of the bank for the bill should be sufficient to convince anyone that it does not hide risks for the banking system.

UtDF MP Svetoslav Luchnikov proposed that Dimitrov perfect the language of the bill between the first and the second reading to give bankers greater decision-making freedom but also put into place sanctions for malpractice.