BUDAPEST, Oct 7 (Reuters) - Hungary's Banking Association elected Tamas Erdei, chairman and chief executive of BayernLB's [BAYLB.UL] Hungarian unit MKB, as its new chairman on Wednesday, the Association's spokesman Janos Muller told Reuters.
Erdei replaces Raiffeisen Chief Executive Peter Felcsuti, who had resigned from the top post in the Association over differences with key bankers over strategic issues in the banking sector.
Erdei told local InfoRadio earlier in the day that the central bank's (NBH) proposals to limit commercial banks' foreign currency lending to households would deepen the country's recession.
The NBH has proposed that the government should issue a decree to limit mortgage lending, including a limit in loan-to-value to 70 percent for forint loans, 54 percent for euro loans and 35 percent for other foreign currencies.
It also proposed payment-to income limits.
Erdei said certain loan-to-value limits may be needed, but the proposals of the central bank would be too strict.
"Banks have been criticized that they are unwilling to lend as they fear risks, and then they would be restricted further by administrative measures," he said.
"I'm not convinced that regulation on this level is needed and that this would serve the interests of the economy.
The government projects economic contraction of 6.7 percent for this year and 0.9 percent for next year.
The NBH has said that the lending limits may moderately slow economic recovery, but would help future economic growth find a more healthy structure. (Reporting by Sandor Peto; Editing by Rupert Winchester)