Romania's lawmakers voted on Wednesday, May 6, the law that caps the interest rates banks can charge on loans, Economica.net reported.

The bill sets maximum spreads above the monetary policy (refinancing) rate for the interest rates charged by banks on mortgage and consumer loans.

The outstanding loans are also subject to the new law when it comes into force. The law can be challenged at the Constitutional Court.

A similar bill was ruled as unconstitutional last year - but rather on procedure than on its content.

Romania's National Bank (BNR) expressed regret that the bill's author, MP Daniel Zamfir (formerly a member of the Liberal Party, now a Social Democrat) failed to consider the recommendations drafted by the monetary authority on this topic, Hotnews.ro reported.

Local banks' representatives said that "they will demonstrate more caution until fully understanding the impact of the law, and the effects of other laws that follow to be endorsed."

The law, as endorsed by the Parliament, provisions that in the case of mortgage loans, the effective interest rate (DAE) cannot exceed by more than 2 pp the refinancing rate (2%, currently). The effective annual interest rate in the case of consumer loans may not exceed by more than 15 pp the refinancing interest rate. In the case of consumer loans with a maximum value of RON 15,000 (EUR 3,000), the total amount to be repaid by the consumer may not be more than double the amount borrowed.

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editor@romania-insider.com