New Regulatory Milestone
The Central Bank of Cyprus has set the benchmark reference interest rate at 11.62% under Article 314A of the Penal Code (Chapter 154). The move signals continued regulatory oversight of lending practices in the financial sector.
Legal Framework And Enforcement
According to the Central Bank of Cyprus, the provision states that any person who, during the granting, renewal, extension or prepayment of a loan, seeks or receives an economic benefit that exceeds the reference interest rate may be committing a criminal offense. The rule applies whether the benefit is taken directly or indirectly, and whether it is intended for the individual or a third party.
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Potential Penalties
Violations can result in penalties of up to five years in prison, a fine of up to €30,000, or both. The measure is intended to discourage excessive interest charges and ensure compliance with the legal limits on lending rates.
Enhancing Oversight Of The Credit Market
The announcement forms part of broader supervision of the credit market and is aimed at protecting borrowers through stricter compliance with existing laws. The Central Bank of Cyprus said it will continue monitoring lending practices to maintain financial stability and consumer confidence.
