Overdrafts on the rise, businesses and citizens withdraw over 650 million euros

A major crisis is pushing businesses and citizens towards commercial banks for overdrafts. By the end of 2025 alone, businesses and citizens had withdrawn over 650 million euros from banks, an increase of over 11 percent compared to 2024.

The largest part of this value is made up of business overdrafts, which in 2025 increased by about 49 million euros or 10 percent.

This type of debt is a form of short-term credit that is tied to an individual's salary.

Businesses and citizens are choosing overdrafts to have a 'safe reserve' of money, for salaries or unexpected expenses, that is used only when the need is real.

Banking expert Milazim Abazi says that overdrafts are only offered to the most reliable bank customers and are directly linked to increased business turnover and wages.

(View from the production line, salary payment)

According to Abazi, businesses use overdrafts mainly when receipts do not match monthly payments, such as salaries or imports. He adds that in recent years, borrowing has increased, and with it, overdrafts have also increased.

"In general, in Kosovo in recent years, credit has been increasing. Along with the increase in loans, overdrafts have also increased. An overdraft is a loan that only the best, most trusted clients of banks can take out. And overdrafts are mainly related to business turnover and salary increases. In 2025, there was an increase in business turnover, but there was also an increase in salaries. That is, businesses take out overdraft loans, mainly when receipts do not match payments. For example, they have to pay salaries at the end of the month, there has not been enough income and they use overdrafts. Overdrafts have one advantage because they are only used when you need them and they only pay interest when you use them. Tomorrow you have a daily shopping trip, you deposit the daily shopping trip in the bank and the overdraft goes to zero or decreases. So you do not pay for the amount you took out. Let's say you took out 100 thousand euros in this overdraft and you paid your salaries or made an import and then "Product sales, the daily market has arrived and the overdraft has been closed for a week, two weeks. So it is the most comfortable loan that businesses are willing to take. Because it is like a budget reserve," says Abazi.

Overdrafts, according to Abazi, are also used by citizens, especially for unplanned expenses, such as during house construction or various purchases.

He even says that he himself was forced to take out an overdraft for personal reasons.

"Citizens, for example, I took a loan to build a house, 30,000 euros and the bank offered me an overdraft of 4 thousand euros. And I took the overdraft, because when you build a house, some things you can't plan. And those 4,000 are used for unplanned things. Otherwise, every 30,000 euro loan must be covered and paid through the bank... The interest rate on the overdraft is a little higher, but in total it comes out lower, because you only pay when you use it. While with other loans, regular loans, investment loans, you pay even when you have the opportunity to repay it, you can't repay it ahead of time", emphasizes Abazi.

The Central Bank of Kosovo has reported on the flow of bank overdrafts over the years.

Meanwhile, the Association of Banks of Kosovo says that the increase in overdrafts is related to the growing need for flexible liquidity management and confidence in the banking system.

"The increase in overdrafts is related to the growing need of citizens and businesses for flexible liquidity management, improved lending conditions from banks and trust in the banking system. Furthermore, the increase in economic activity affects the increased use of this financial product and of course this growth is driven by the growing demand for financing. Based on economic stability, citizens' confidence and the flexibility of the banking offer, it is expected that the use of overdrafts will continue to increase gradually, especially for business liquidity management and daily household expenses," the Association of Banks of Kosovo said in a written response.

The association emphasizes that this trend does not endanger financial stability and that banks operate in accordance with the regulations of the Central Bank of Kosovo. According to them, the rate of non-performing loans remains low, only 2.1 percent.

"This trend shows that banks offer responsible and controlled products, respecting the regulations of the Central Bank of Kosovo. The use of overdrafts promotes customer flexibility without jeopardizing financial stability, and contributes to strengthening confidence in the banking sector. Banks take clear and proactive measures to prevent debt overload, based on responsible lending and financial education. This approach is yielding concrete results: customers' ability to repay obligations remains stable and the rate of non-performing loans is low, only 2.1%, which demonstrates the stability and responsibility of the banking sector. This trend shows that overdrafts offer flexibility to customers without jeopardizing financial stability, while the strong regulatory framework of the Central Bank of the Republic of Kosovo ensures that these products are controlled, responsible and in the function of strengthening confidence in the banking sector", it says, among other things.

According to the Kosovo Agency of Statistics, the average salary for 2024 in our country is 639 euros gross. The minimum wage is currently 425 euros gross.

What is a bank overdraft?

Bank overdrafts, according to data from the Central Bank of Kosovo on financial education, are a form of short-term credit that is linked to an individual's salary.

“An overdraft is a form of short-term credit (usually linked to an individual's salary) that allows a bank account to be kept below zero, allowing the account holder to withdraw more money than is actually in the account.

For example, if a person has an amount of 500 euros in their bank account and wants to withdraw 600 euros. In this case, the overdraft will be activated and the person will have 100 euros more available than they actually have in the account. This amount is considered debt and is useful for emergency situations or other unavoidable needs,” states the CBK financial education on Overdraft.