EBA - Final Report - Guidelines on loan origination and monitoring

The European Banking Authority (EBA) developed the Guidelines on loan origination and monitoring in response to the Council of the European Union’s Action Plan on tackling the high level of non-performing exposures. The European Council, in its July 2017 Action Plan, invited the EBA to ‘issue detailed guidelines on banks’ loan origination, monitoring and internal governance which could in particular address issues such as transparency and borrower affordability assessment’. 

The objective of the guidelines is to improve institutions’ practices and associated governance arrangements, processes and mechanisms in relation to credit granting, in order to ensure that institutions have robust and prudent standards for credit risk taking, management and monitoring, and that newly originated loans are of high credit quality. The guidelines also aim to ensure that the institutions’ practices are aligned with consumer protection rules and respect fair treatment of consumers. Through these objectives, the EBA aims to improve the financial stability and resilience of the EU banking system.

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