Loans without documentation, loans without hidden fees, apply online, money in your hands in 15 minutes - these are just some of the marketing slogans for the placement of quick loans at effective interest rates over 5000% that are offered to the citizens of Bosnia and Herzegovina.

Some statistics.

Bosnia and Herzegovina is one of the poorest countries in Europe. With an average net salary of 1,304.00 KM, an unemployment rate of 13.5%, an extremely low level of financial literacy, but also the inability to access traditional financial institutions, the citizens of our country increasingly use the services of payday lenders .

Payday loans or fast loans are short-term cash loans with high interest based on income. In general, the principal of the loan is generally equal to a part of the upcoming salary. They function as unsecured loans because they do not require any collateral.

Such loans are considered a form of predatory loans due to extremely high interest rates, hidden fees and the lender’s lack of concern about whether the borrower can repay the loan or not.

Precisely because of the enormously high costs, such loans end up as a debt trap for clients who are unable to get out of the debt burden they have accumulated using the services of this type of lending.

And while regulators in Western Europe, as well as in the surrounding area, limit the work of such financial organizations by limiting the amount of the effective interest rate or tightening the criteria for granting loans, the competent regulators in BiH, the Banking Agency of the RS and the Banking Agency of the FBiH are in no way established a system of business control and protection of citizens from such loans.

The question arises: for what reasons?

When Russians and Bulgarians lend you money

Digital Finance International is part of the Russian financial group Finstar, headquartered in Moscow, which operates in Europe, the USA, Asia and Latin America.

The first man of this group is the Russian oligarch Oleg Vitorović Boyko with strong ties to the regime in Moscow. According to Forbes, his fortune is estimated at 1.2 billion dollars, and because of his connections with the regime of Vladimir Putin, he is under sanctions from Australia and Ukraine.

Boyko accumulates "original capital" after the non-transparent privatization carried out in the former Soviet Union, and builds his business empire primarily in the fields of finance and real estate, steel trade, games of chance and betting, media and the development of digital technologies.

According to a 2017 US intelligence report, Boyko was identified as "an individual with troubling ties to the Russian government and Russian security services involved in organized crime." It is Oleg Boyko who will be the main actor in the affair of avoiding the payment of millions of EUR in taxes through companies in Malta.

Oleg Boyko/photo: moderndiplomacy.eu

The companies of the Russian oligarch, whom the Ukrainian media has linked to the former KGB, and the Moldovan one to interference operations in the Balkan elections, are present in Croatia through betting, and in Bosnia and Herzegovina, Macedonia and Albania through the provision of microcredit financial services .

Microcredit company Digital Finance International has been operating in BiH since 2016, when the RS Banking Agency gave them the necessary permits. Two years later, after personnel changes within the FBiH Banking Agency, this company received a license to work in the territory of the FBiH.

According to the available data from the register, this company is owned by Digital Finance International  limited, registered in Cyprus, and they operate in our country through the placement of two financial products.

The Forza program, short-term loans with a repayment period of up to one month. If you are using these services for the first time, the maximum loan amount is 400.00 KM. If you return the loan on time, they will pay you 40 KM interest.

And if you withdraw the amount of 400.00 KM in case the funds are withdrawn in full and returned after 12 months, the credit user will pay interest at the annual level of 120% for the first month, and 240% for each subsequent month. Ultimately, the effective interest rate for this loan is 645.23%.

So, the total amount for this loan is 1,320.00 KM, of which 400.00 KM is principal and 920.00 KM interest. Of course, the final interest rates also depend on the rate of loan repayment.

Another product available on the BiH market is Kreddy.ba with a maximum loan amount of 3,000.00 KM and a repayment period of 3-18 months and an EKS of 86.49%.

The market gap created by the withdrawal of the officially Estonian microcredit company Iutecredit from BiH due to an accumulated loss of 5.5 million KM was filled by the microcredit organization Flexkrediti, founded in 2022 in the Republic of Srpska by the Bulgarian companies MV Finance with 80% ownership and Goran Arsov with 20% ownership.

Flexcredit Sarajevo branch/photo: N1

Today, this microcredit company also operates in the Federation of Bosnia and Herzegovina, providing placement services for several types of quick loans. For example, for the product "Payday loan" EKS for 100.00 KM is 5370.31% with a nominal interest rate (NKS) of 300% and the cost of the express approval fee of 7.342% on the amount of the approved loan.

From regulator to consultant

According to available publications, the average weighted effective interest rates in the microcredit sector in the Republic of Srpska for 2023 are 22.30 percent, while in the Federation of BiH they are 22.86 percent.

We asked the Banking Agency of the RS and FBiH for an explanation of the enormous differences between the average interest rates in the sector and the interest rates charged by companies such as Digital Finance International or Flexkrediti .

We did not receive any answers to our inquiries about interest rates, control of the operations of these financial companies, as well as the origin of the founding capital, regardless of our continuous insistence.

Employees of the FBiH Banking Agency/photo: FBA

The Director of the Banking Agency of the RS, Srđan Šuput, emphasized in a telephone conversation that we will not get answers, while no one from the Banking Agency of FBiH has responded to a series of questions that we sent.

The absence of answers to these questions is completely unclear when we take into account the fact that the regulators are the final instance that must protect the market and educate citizens about the consequences of using these financial services.

The entire Balkan region is flooded with companies with foreign capital and an unclear ownership structure. Branimir Jovanović, an economic expert for the Western Balkans at the Vienna Institute for International Economic Studies, points out that poverty in the countries created by the breakup of Yugoslavia is so high that these loans represent the only financial model of survival.

"For this reason, the effective (total) interest rates of these fast loans must be limited, in order to mitigate this a little. Macedonia did it in 2018, if I’m not mistaken, at about 50%, and other European countries have restrictions as well. If they can, why can’t Bosnia and Herzegovina? The interest limit is not a cure for all the problems these loans bring, but it certainly helps."

Branimir Jovanović/photo: istokrs.com

The regulation of the business of companies that provide quick loan placement services in Bosnia and Herzegovina, as well as in the region, is weak or non-existent. Jovanović points out that such an environment opens the door to the business of dubious companies.

"Quick loans are valid everywhere for high-risk activities when it comes to money laundering, the same as casinos and betting shops, because it is difficult to determine how much of the money that has been registered is related to real transactions and how much to fictitious ones. In our countries, where state institutions have weak administrative capacities and where laws are poorly enforced, the control of these new entities is practically non-existent, so companies abuse this."

In addition to the weak capacity of the regulator, Jovanović also emphasizes the interest connections between the owners of these companies and politics. It is precisely in this domain that business controls should be analyzed, as well as the process of obtaining business licenses.

"Adequate control is not carried out, and this is partly a consequence of the weak administrative capacities I talked about, but it is also a consequence of the fact that these companies are often connected to people from the government. In Macedonia, for example, these loans started to appear in 2015/16, and those companies that appeared then were connected to the then government. When the government changed, those first companies declined, but some others, close to people from the new government, appeared."

Be careful who you correspond with

In the middle of 2021, Albania was rocked by a scandal with the leakage of personal data of 600,000 users of quick loans from the company Credit 2 All-Digital Finance International SHPK, which, according to RSE , is also owned by Oleg Boykov.

This is the biggest leak of personal data and sale on the black market. Documents with the monthly salaries of thousands of citizens employed in the public and private sectors, including well-known names, were distributed through social networks.

Due to this scandal, the Albanian police arrested four employees of this company, and a discussion on the protection of personal data was also initiated.

The company Digital Finance International in BiH offers the service of applying for a loan via the Internet. As we were informed by the customer service, you can apply for a short-term loan in the territory of FBiH by submitting the documentation required for loan approval, CIPS not older than one year, an identity card and a payslip to the nearest branch, after which your request will be further processed .

If you are applying from Republika Srpska, you can submit complete documentation via Viber.

As stated on the Forza.ba page , “[all] your information and data are processed using the most secure protocols and encryption in the world. Our company invests a lot in the security of our IT system and our processes. We work with the most advanced technologies in the world, which makes us unique in the region."

Until the publication of this text, the company Digital Finance International did not receive a response to the inquiries of the Tačno.net portal.