Governor Mehmeti: The international arbitration recognized the fair decision of the CBK

The Governor of the Central Bank of the Republic of Kosovo, Fehmi Mehmeti, said that the victory of the international arbitration process against the financial institution Iute Credit proved that the CBK was and remains confident in the legality and proportionality of the decisions, in relation to this institution, and all decisions issued by its executive bodies.

At the press conference, Governor Mehmeti revealed the background from the registration of this microfinance institution on 27 October 2017 up to the decision taken by the CBK Board to revoke the license and initiate liquidation procedures.

On this occasion, Governor Mehmeti said that through its licensing policy, the CBK continuously aims to offer the best possible conditions for access to finance in Kosovo, enabling the operation in our financial market only of institutions, which contribute to the stability and development of the financial system, consequently, the sustainable economic development of the country as well.

“During the period of operation of Iute Credit in Kosovo, this institution has continuously deviated from the business plan, based on which it had received the license to operate, thus bringing to our market something different from what it had promised. In accordance with the duties and responsibilities related to the supervision of financial institutions, the CBK has conducted two examinations focused on this institution on its compliance with the operation in addition to the business plan approved upon registration by the CBK. CBK’s examinations had identified a series of major violations and that the interest rates applied by this institution were beyond any standard, either if we compare them with the projections of this institution, or in relation to the interest rates on loans that are applied from other financial institutions in the country. This deviation was contrary to the legislation in force and that, with its activity, it had jeopardized the solvency of the borrowers and thus posed a risk to the financial stability of the country,” Governor Mehmeti said.

Based on the violations evidenced by successive examinations, the Executive Board of the CBK, on 6 December 2019, based on the powers guaranteed by Article 36 paragraph 1, subparagraphs 1.11 and 1.12, as well as Article 67 paragraphs 1 and 2 of the Law on the Central Bank of the Republic of Kosovo, as well as in accordance with Article 105, paragraph 1, subparagraph 1.10 of the Law on Banks, Microfinance Institutions and Non-Bank Financial Institutions, decided to revoke the registration and initiate liquidation procedures for the microfinance institution “Iute Credit Kosovo” J.S.C.

He stated that the CBK was and remains confident in the legality and proportionality of the decisions, in relation to this institution, and all the decisions issued by its executive bodies.

The institution in question, in accordance with its legal right, had initiated a lawsuit in the International Arbitration, to contest the legality of the decision of the Executive Board of CBK.

“CBK thanks the Government of the Republic of Kosovo for initiating the allocation of funds for the defence of the Republic of Kosovo in arbitration. The CBK also thanks the Ministry of Justice and the State Advocacy for establishing direct contact between the CBK and the defence firm for the Republic of Kosovo. From the beginning, I appointed the former deputy governor Sokol Havolli as the bearer of this process, who, in cooperation with his subordinates, successfully carried out every phase in defence of the Republic of Kosovo, who was also the key witness in the arbitration. Also, I take the opportunity to congratulate all the other employees at CBK who have been on top of their duties throughout the entire work and defence process. Our faith in the professionalism of the employees at CBK has never wavered. As a result of all this commitment and professional process by the Central Bank of the Republic of Kosovo, we have managed to have an epilogue 100% in favour of the country. As the bearer of all responsibilities within the institution I lead, I feel happy with this result and with all the results achieved over the years. As important as the result is also the fact that the costs associated with this process will be borne by the plaintiff. I feel special pride that I have managed to protect the state, the citizen, the institution and financial stability throughout this time, in cooperation with all my colleagues at the CBK. At different times, we have faced challenges and orchestrated attacks from both inside and outside, which were intended to damage the processes of CBK but also my reputation, the reputation of CBK and that of the Republic of Kosovo. In some cases, they have made me feel bad. But I have never felt that I am not following the law.”

Governor Mehmeti has stated that the Central Bank of the Republic of Kosovo is committed to creating conditions for the growth of healthy competition in our financial market, enabling a fair competition between financial institutions that ensure increased access to finance and improvement of conditions, but will never allow the operation of those institutions that do not comply with the regulatory and legal requirements of the country and that take advantage of the difficult financial conditions in which a part of our citizens can be found, thus bringing services that impoverish them and make their lives even more difficult.