Greater protection for privates that grant loans to small and medium-sized enterprises.

With the Banca d’Italia «Provision on savings collection from non-bank subjects», published in the Official Gazette of 8th November 2016, the legislator took action on the protection for the private subjects who lend founds to subjects different from banks.

The provisions will enter into force on 1st January 2017 and the information obligations through notes on the accounts start from the account related to the financial year 2016.

The prohibition of “at sight” loans for subjects different from banks is confirmed. Not only the saving immediately repayable at the applicant’s request (or with 24 hour notice) will be considered “at sight”, but even the saving for which it is provided a longer notice period in the event that the subject who collected the founds reserves to himself the right to reimburse the applicant simultaneously or before the final date.

Among the main points of the measure, larger guarantees for the social loan and incentives for the social lending development (or lending based crowdfunding) are provided. The provisions strengthen the capital charge required to those cooperatives which received social lending for an overall amount of over three times their assets (and in any case within the maximum of five times).

For transparency reasons, cooperatives with more than 50 shareholders shall include in the notes on the accounts the amount of the collection made from its shareholders (even with regard to the company’s asset), the financial guarantee market value, the guarantor and the type of the guarantee should the company collect form the shareholders an amount of three times its assets.

With regard to the social lending, the provisions fix the limits within which the activity shall be done, in accordance with the rules on people’s savings. Social lending, through online platform, allows the meeting between the entitles applying and potential financiers and aims to answer to the constant credit narrowness to companies. Specifically, it does not consist in public savings collection both the collection of funds included in payment accounts exclusively used for provision of payment services by authorized entities, and the reception of funds associated with the issuance of e-money.

Concerning to borrowers, it does not consist public savings collection the founds acquisition made after personalized negotiations with each founders and the founds acquisition from people subject to prudential supervision and who are working in banking, financial, security, insurance and pension fields.

The possibility for bank performing in social lending through online platform to collect without any limits is still possible.