SERBIA Law and Practice Contributed by: Željka Motika, Ivana Bulatović and Jovana Spasojević Gligorijević, Motika i partneri
By contrast, the Law on Digital Assets does not impose formal best execution obligations on advis - ers providing digital asset advisory services. However, where such services are offered to natural persons in a business‑to‑consumer context, the relevant con - sumer protection rules apply. In addition, advisers that provide other licensed digital asset services must comply with certain general standards. These include: • acting fairly, honestly, and professionally; • prioritising clients’ interests; • providing accurate and transparent information; and • executing orders without undue delay. 4. Online Lenders 4.1 Differences in the Business or Regulation of Fiat Currency Loans Provided to Different Entities Online lending in Serbia is limited exclusively to banks and is treated as a regulated financial activity that requires licensing and supervision by the National Bank of Serbia. Electronic money institutions and pay - ment institutions may extend only limited short‑term credit directly linked to payment services (eg, author - ised overdrafts), but they are not permitted to offer standard cash loans. NBS regulation enables fully online lending – including remote, video‑based client identification – for both new and existing bank cus - tomers. The regulatory framework for fiat loans varies depend - ing on the status of the borrower. Loans issued to indi - viduals, farmers, and entrepreneurs are subject to the most stringent rules. These include comprehensive pre‑contractual disclosure requirements, transparen - cy obligations regarding interest rates, rights related to early repayment, and enhanced NBS supervisory oversight. Lending to legal entities is also regulated, but the requirements are less formalised and do not include consumer‑specific protections. Foreign loans are subject to particularly strict rules. The Foreign Exchange Operations Act and accom - panying NBS regulations impose additional obliga - tions whenever either the lender or borrower is a
non‑resident. In all such cases, resident parties must report transactions to the NBS, with even stricter requirements applying when a domestic bank lends to non‑residents, especially those outside the EU. Due to NBS’s focus on safeguarding financial stability and the monetary system, online lending procedures can - not be used for foreign loan transactions. Regardless of borrower type, all lending and loan intermediation activities are subject to AML and CFT obligations. 4.2 Underwriting Processes In the Republic of Serbia, underwriting processes – used to assess creditworthiness and risk – vary depending on the borrower category, regardless of whether the loan is granted online. For bank lending, underwriting is largely shaped by regulatory requirements and internal bank policies derived from the National Bank of Serbia regulations. Before approving a loan, banks must evaluate the client’s creditworthiness, which includes analysing income, indebtedness, repayment history, and the risks associated with both the transaction and any collateral. For loans to individuals, particular attention is given to the borrower’s ability to meet obligations throughout the entire loan period, in line with responsible lending rules. These processes are supervised by the NBS and must be fully documented and consistently applied. For loans to entrepreneurs and legal entities, under - writing involves financial analysis of the business, assessment of cash flow, creditworthiness, indebted - ness, and evaluation of business and sector-specific risks. While these processes fall under general risk management requirements, banks have greater dis - cretion in defining their methodology compared to the more strictly regulated consumer lending segment. 4.3 Sources of Funds for Fiat Currency Loans Banks, as the sole online lenders operating in the Republic of Serbia, may use various sources of fund - ing to issue loans in fiat currency. These sources include deposits, their own capital, bond issuance, interbank loans, and foreign borrowing. All such activi -
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