Regulatory Alerts2013-12-03
Supervisor of Banks Directive on Interest Rate Reduction or Increase
The Supervisor of Banks issued a directive requiring banking corporations to apply interest rate changes for variable-rate loans and deposits to the same base interest rate used at origination. For LIBOR-based loans, banks may implement an objective, quantifiable, and symmetrical mechanism for extreme rate adjustments, provided they ensure full disclosure in loan agreements. This directive applies to individual and small business accounts and became effective on January 1, 2014, with deposit provisions taking effect on July 1, 2014.
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