Regulatory Alerts2022-10-27
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Annex A: Impact of Revision to Interest Rate Limits under the Money Lenders Ordinance on the Banking Industry
The document outlines the revised statutory interest rate limits under the Money Lenders Ordinance effective from 30 December 2022, lowering the legal limit from exceeding 60% to exceeding 48%. It simultaneously reduces the Annualised Percentage Rate threshold presumed to be extortionate under section 12.3 of the Code of Banking Practice from exceeding 48% to exceeding 36%. Authorized Institutions must justify why such high interest rates are not unreasonable or unfair, unless exceptional monetary conditions apply.
Annex A Impact of the revision to the interest rate limits under the MLO on the banking industry via section 12.3 of the CoBP Period Annualised Percentage Rates (APRs) as mentioned in section 12.3 of the CoBP The level which is presumed to be extortionate under the MLO* The legal limit as stated in the MLO** Before 30 December 2022 Exceed 48% Exceed 60% On or after 30 December 2022 Exceed 36% Exceed 48%
- AIs should be able to justify why such high interest is not unreasonable or unfair ** Unless justified by exceptional monetary conditions