Moldova will introduce new rules for displaying the effective annual rate in advertisements and will oblige banks to increase the size of these letters and numbers 3 times.
This is provided for by relevant amendments to the Law on Consumer Credit Contracts with, which were approved by the government, while issuing a positive opinion on the relevant bill prepared by a group of PAS party MPs. As noted by the Ministry of Finance, in particular, credit institutions will be required to display the actual annual interest rate, that is, the direct interest rate on the loan plus all fees associated with the loan, in 3 times the size of the letters and numbers in other information specified in the advertisement, so that citizens are properly informed. The amendments were approved by the Cabinet of Ministers in order to increase the level of protection of consumers who take out loans and increase confidence in the financial sector. The bill also establishes minimum standards for responsible lending, prohibiting the application of floating interest rates on loans of less than three average salaries in the economy. Specifically, amendments to the Law on Consumer Credit Contracts provide that "a floating interest rate shall not apply to a loan of less than three average monthly wages in the economy." In addition, the Civil Code is planned to be amended, under which credit institutions are required to notify the debtor (consumer) in electronic form if the interest rate applied by the bank to new loans, so that the beneficiary could renegotiate the loan agreement, depending on the fluctuations of the average interest rate in the banking sector. In particular, a new article "Average interest rate on outstanding balances of loans in the banking sector" is proposed to be included in the Civil Code. It stipulates that in case of reduction of the average interest rate on outstanding credit balances from 1 to 2 years in the banking sector, calculated by the National Bank of Moldova, the creditor bank shall notify the debtor about this reduction through electronic means within maximum 5 working days after the data publication. The fluctuations of the average interest rate on the balances of loans with a term of 1 to 2 years in the banking sector will serve as reference point for this indicator as of the date of signing the contract. If the average interest rate of the banking sector for the outstanding loan balances for the period from 1 to 2 years has decreased by at least 1 percentage point compared to the index at the date of signing the contract, the bank shall notify the debtor about its right to renegotiate the loan contract in order to change the interest rate in favor of the debtor. In renegotiating the interest rate on the credit contract, the bank will have to offer an adjustment in favor of the debtor in an amount not less than 50% of the reduction of the average interest rate of the banking sector for the balances of loans with a term of 1 to 2 years. If after the debtor's application the bank agrees to renegotiate the loan agreement by changing the interest rate in favor of the debtor, the new benchmark for the average interest rate on the balances of loans is the date of signing an additional agreement to change the interest rate on the loan agreement. If after the application of the debtor the bank refuses to renegotiate the credit agreement by changing the interest rate in favor of the debtor, the debtor will have the right to early repay the credit agreement without paying any financial sanctions in connection with the early repayment. In addition, the Civil Code is proposed to be supplemented with provisions under which a higher-ranking pledgee may not prohibit the debtor from pledging these guarantees in favor of another creditor who will establish a lower-ranking pledge. It is stipulated that any contractual provisions whereby a higher ranking pledgee prohibits the debtor from pledging the pledged assets as a lower ranking pledge in favor of another creditor shall be deemed null and void. // 04.04.2022 - InfoMarket
