When taking out a loan, completing an application and waiting for a transfer, we are often not sure whether the commitment is related to non-bank institutions or parabanks. By confusing these terms, we can seek (or get the wrong) answer to questions such as: is the loan you just took fully secure? How do parabanks operate in Poland and what activities are associated with them? Is a non-bank institution the same as a parabank?

Bearing in mind these difficulties and wanting to clearly define the differences between them, we have prepared a comprehensive article that will answer the above questions.


Are all loan companies parabanks?

company loan

No, although in fact both terms are simplified in this way. Parabank is a highly discrediting term, mainly reducing the competences of working entities. What’s more, socially parabanks are not very credible, which from the image point of view is not an attractive solution for loan companies. It is also worth mentioning that parabanks often operate on the border of the law and are not subject to external regulations, which again does not apply to loan companies.


What is a parabank?

What is a parabank?

Well, referring to the above information, it will be difficult to clearly state what a parabank is, because Polish law does not clearly define this definition. They are not defined by the Polish Classification of Activities. However, gathering information and trying to draw up a definition, it turns out that the parabank is an entity that carries out activities characteristic of banks, but on a different basis and based on other provisions. Parabanks rely on the capital of private individuals, while being able to accept cash contributions. It is also worth emphasizing that the money invested is risky.


What are non-bank institutions?

What are non-bank institutions?

Non-bank institutions grant loans – short-term and installment, using own funds and funds from owners or investors. Therefore, these institutions do not deposit funds from private clients, thus not exposing them to the risk of loss or unstable financial situation. The rules for granting and paying out loans are regulated by laws and regulations (specifically the Consumer Credit Act). According to them, the duties include:

  • informing potential clients about the APRC amount
  • accruing interest (within the specified limit),
  • enabling clients to withdraw from the loan agreement within 14 days
  • Importantly, from the borrower’s point of view – in the case of financial problems of non-bank institutions, its clients are not exposed to losses, but investors.

Is using parabanks safer than using non-bank institutions? Theoretically – no.
Almost all non-bank institutions are reliable, proven and reliable. The percentage of unbelievable branches is smaller than in the case of parabanks.

However, as experience teaches, it is better to check the institution before making the final decision. Please note:

  • for the company to be a member of the Polish Association of Non-Banking Institutions and listed in the register of loan institutions of the Polish Financial Supervision Authority;
  • on opinions contained on the Internet – on forums, social media, etc.
  • on NIP, REGON and KRS, which your lender must have

Summing up the above information, it is worth emphasizing that parabanks and non-bank institutions are two separate entities. The former is less reliable and is more risky. The lack of clear rules and standards allows a lot of freedom, and their capital is based on the capital of private persons, not investors as in the case of banking institutions. As a result of these actions, parabanks are less reliable and, consequently, less secure.