Regulatory Alerts2012-03-22
Early Repayment of a Non-housing Loan
The Supervisor of Banks issued this directive to regulate early repayment fees for non-housing loans extended to individuals and very small businesses, aiming to increase market competition and prevent excessive charges. The document mandates that banks must not unreasonably refuse early repayment requests and caps specific fees, including a maximum operating fee of NIS 60 and a short-notice fee of 0.10 percent, while defining precise formulas for calculating capitalization components based on interest rate differentials. Additionally, the regulation requires banks to provide borrowers with detailed explanatory notes regarding their rights and fee structures before and during the repayment process, and specifies acceptable methods for submitting prior notice.