In Moldova, to protect the recipients of loans, it is planned to limit the size of the maximum interest rate of the loan and its full cost.
In particular, it is planned to limit the interest rate on loans at the level of 50%, and also provide that all other expenses (commissions, fees, fines, late interest and any other payments), which are included in the total cost of the loan, excluding interest, would not exceed 0.04% per credit day. This is provided for by amendments to the Banking Law, the Law on Non-Banking Credit Organizations and the Law on Savings and Loan Associations, the introduction of which was approved by the government, giving a positive opinion on the relevant bill developed by a group of deputies. The purpose of the bill is to increase the level of protection of consumers applying for loans, to promote the security of the banking sector, as well as consumer confidence in the financial sector. It is also planned to supplement the Law on Banking Activities with a new article on responsible lending requirements, which provides that, before entering into a loan agreement, the bank must assess the borrower's performance in accordance with the principle of responsible lending, based on sufficient information received from the loan recipient and by checking registers and information systems used to assess the bonitet, and other evidence. If the parties to the loan agreement have agreed to change the total amount of the loan after the conclusion of the agreement, the bank must update the available information about the recipient of the loan and reassess its value before each significant increase in the total amount of the loan. Personal data used for the purpose of evaluating the performance of loan recipients will be processed in accordance with the procedure established by law applicable to the protection of personal data. It is stipulated that when assessing the quality of loan recipients, an assessment will be made of their ability to take on a specific financial obligation that they can fulfill, together with other existing financial obligations, and at the same time, the bank must objectively evaluate all hidden material factors, taking into account information provided by the recipient of the loan from registers and information systems used to assess the credit rating, and other information available to the bank that may affect the credit rating of the client, in particular, about the income of the loan recipient, his/her credit history, the possibility of changing income. The loan should be based (taking into account historical data, economic cyclicality) on the limitation of the ratio of the rate / average monthly income of all obligations of the debtor, on the basis of loan agreements and other agreements with loan providers. The assessment of the borrower's performance on the basis of currently available information should be based on the presumption that the borrower will be able to fulfill his/her financial obligations during the entire term of the loan agreement. At the same time, the loan recipient must provide the information requested by the bank, which is necessary for assessing the loan recipient's performance. It is stipulated that interest, penalties and any other fees from late payments are not charged to the recipient if the loan bank, through no fault of the recipient of the loan, has incorrectly assessed the credit recipient's property. Responsible lending indicators and requirements for assessing the quality of loan recipients will be established by the supervisory authority. Herewith, another amendment to the Banking Law contains requirements regarding the total amount of the loan, and it states that the total amount of the loan must be reasonable, comply with the requirements of good commercial practice and not upset the balance between the recipient of the loan and the bank. It is considered that the total amount of the loan will not meet these requirements if, at the time of conclusion, amendment or extension of the loan agreement: the loan interest rate specified in the loan agreement is higher than 50%, and all other expenses (commissions, late fees and any other types of payments) included in the total loan amount, excluding interest, for one day of the loan is higher than 0.04% of the total loan amount; the total cost (including interest, commissions, penalties, late interest and any other types of payments) as defined in the Law on Credit Agreements with Consumers, is greater than the total cost of the loan. It is provided that the court may reduce the total amount of the loan after assessing the nature of the contractual relationship between the parties, the amount of the obligation, bank expenses, the circumstances of the conclusion of the loan agreement and other relevant circumstances. Similar amendments are proposed to be made to the Law on Non-Banking Credit Organizations and the Law on Savings and Loan Associations. The Government of Moldova approved their introduction, at the same time expressing a number of proposals to improve the bill. // 02.03.2022 — InfoMarket
