Amendments to statutory interest rate cap take effect
Starting from today (December 30), the statutory interest rate cap for lending stipulated in the Money Lenders Ordinance (Cap. 163) (MLO) is amended from 60 per cent to 48 per cent per annum, and the threshold of extortionate rate (which may trigger reopening of the transaction by the court, having regard to the relevant circumstances) is amended from 48 per cent to 36 per cent per annum.
The above amendments were passed by the Legislative Council in October this year, and will apply to loan repayment agreements and interest payment agreements coming into force from tomorrow.
"Members of the public are reminded to note the latest statutory interest rate cap for lending when borrowing. Under the MLO, licensed money lenders are also required to furnish borrowers with a note or memorandum setting out, amongst others, the principal of the loan and the rate of interest charged," a spokesman for the Financial Services and the Treasury Bureau said.
Members of the public may make use of a calculator to be provided on the Companies Registry's website starting from tomorrow (www.cr.gov.hk/en/services/money-lenders/calculator.htm) to calculate the effective rate of interest of a loan in accordance with the MLO in case of doubt of whether the interest rates in the loan agreement are in compliance with the statutory cap, and could report to the Police if a licensed money lender is suspected of charging interest rates above the statutory cap.
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