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CBC Reduces Reference Rate

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The Central Bank of Cyprus (CBC) announced a reduction of the reference rate – the maximum permissible rate of interest lenders can charge - from 9.92% to 9.23%. The reduction came into effect from January 26, 2018.

Prior to the reduction, the Criminal Code had been amended in 2011, with the addition of a new article 314A, which made it a criminal offence for lenders to charge interest at excessive rates.

The reference rate set by the CBC  is based on the average interest rates charged by credit institutions, plus an uplift of 50%. The offence of charging interest at excessive rates is punishable by up to five years’ imprisonment; can incur a fine of up to €30,000 - or both.

There are several exclusions to the reference rate; loans made by authorised credit institutions, loans between associated companies, and loans of more than €1 million to companies financed from overseas are not subject to the limit.