Contents
Article 3. The Application of Method for Loan Interest Calculation of Commercial Bank.
Article 5. Responsibility of the Commercial Bank
Article 7. Measures against Violator
Lao People’s Democratic Republic
Peace Independence Democracy Unity Prosperity
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Bank of the Lao PDR | No. 361/BoL |
Vientiane Capital, Dated 23/04/2012 |
Decision
On Method of Calculating Loan Interest and Fine of Commercial Bank
The Governor of the Bank of Lao PDR hereby issues the following Decision:
This Decision sets out method of calculation of loan interest and fine of Commercial Bank for customers have outstanding payments in order to guarantee the right and interest of the borrower and the Commercial Bank; encourage the transparency and equity of supplying and applying the capital in the business manufacture.
Article 3. The Application of Method for Loan Interest Calculation of Commercial Bank.
The application of method for loan interest calculation of the Commercial Bank should be as follows:
The Commercial Bank can fine customer who violates the loan agreement if the fine measures were provided in the loan agreement. The fine shall be done in comply with the rules set out by the Bank. The maximum level of fine shall not exceed 150% of the interest rate specified in the Agreement.
Regarding the method for determining the fine rate and for calculating the amount of fine, the Commercial Bank must follow these steps:
Fine rate ≤ (interest rate in the loan agreement x 150%)
Amount of fine = Amount of outstanding payment x number of outstanding day x Fine/360 days
Article 5. Responsibility of the Commercial Bank
The Commercial Bank shall specify in the agreement the method of calculating interest, fine, and method of calculating amount of fine in each case, and shall notify, advise the borrower prior to the signing of the agreement. Meanwhile, the Bank shall set up a payment plan to be attached with the loan agreement for reference in keeping track of the payment.
In the operation of business involved in loan providing, the Commercial Bank shall be prohibited from deducting the amount of loan in order to pay interest, the capital for advance loan, unless otherwise being authorized by the Bank of the Lao PDR.
Article 7. Measures against Violator
The Bank of the Lao PDR shall apply measures toward to Commercial Bank which violated this Decision on a case-by-case basis, in accordance with a Decision on measures against the violation of the Commercial Bank No. 811/BoL, dated 18 October 2010 or in accordance with other provisions issued by the Bank of the Lao PDR in each period.
The Commercial Bank shall strictly implement this Decision. The Financial Institution Supervision Department is assigned to monitor the implementation.
This Decision shall become effective from the signing date.
Governor of the Bank of the Lao PDR
[signed and seal]
Somphao PHAISITH