Romania's Constitutional Court rejected as breaching the Constitution a law promoted by the Social Democratic Party (PSD) aimed at capping the interest rates charged by banks and non-bank financial institutions for retail (mortgage and consumer) loans.

The Court admitted the objections raised by the National Liberal Party (PNL).

According to the Court, the law was declared unconstitutional as a whole due to unclear wording, G4media.ro reported. The decision was taken unanimously by the Constitutional Court's judges.

The draft law provided that, in the case of real estate loans, the effective annual interest rate (DAE) may not exceed the monetary policy interest rate by more than two percentage points. It also provided that in the case of consumer loans, DAE could not exceed by more than 15 percentage points the monetary policy interest rate.

andrei@romania-insider.com

(Photo source: Inquam Photos/Octav Ganea)