Benefits Of Consumption, Mortgage, Leasing To Be Capped
Central bank sent a telegram to the financial institutions and banks asking them to launch the work with the benefits cap in the consumption loans, short, medium and long-term loans and housing finance and financial leasing, at the time when the chairman of the Association of Banks, Boualem Djebbar, pledged to introduce the code the content of the instruction that will allow each borrower to recover the amounts that are taken illegally a month before next June.
Chairman of the Banks and Financial Institutions Association, Boualem Djebbar, added that banks are approaching from putting the final preparations of the process that allows the application of the content of the last instruction of the Bank of Algeria on the elimination of excessive interest rates, and high interest rates when considering the loan applications’ files, as he explained that the central bank’s instruction that was issued last September ordered institutions to stop chaos in identifying the excessive interest rates, and confirmed that the excessive ratio is every real medium percentage that is exceeding 20%, and which is applied by banks and financial institutions during the former four months for operations of the same nature.
“Benefit cap includes banking products like dragging overdrafts and short, medium and long-term consumption loans, and financing of housing and renting. Banks are preparing for the process of putting the final touches on the practical arrangements for the actual application of the instruction of the central bank, before the end of this year’s first six months, IE, within the limits of next June, as this procedure represents the action that will protect lenders and users of consumer loans from excessive interest rates”.
“It is normal that the Bank of Algeria plays a preventive role in the direction of the lenders, though the goal of this instruction that is addressed to banks is not to determine the bank interest rates, but granting loans with margins that are based on unacceptable proportions, that are calculated according to the value of resources and re-financing and management of risks, which imposes on banks and financial institutions to declare the real ratios to the Central Bank, within five days at the latest after the expiry of the first five months of the first an second semesters of each year, and in return the Bank of Algeria, and after the end of the semester, will calculate and publish the excessive interest rates in this context. Based on the central bank estimates the borrower will be able to recover the amounts that were taken illegally by the bank”.
“If the excessive benefits are applied, the borrower may request the Bank- according to the new instruction of the Bank of Algeria, to restore the amounts that he/she received in inappropriate ratios with the calculation of the effective medium interest rate of the loan”.
“Violation of these provisions would subject violators to sanctions by the Banking Committee”.