Agreement on Calculation Methods and Penalties for Commercial Bank Loan Interest
关于商业银行贷款利息计算方法及罚款的协议
ຂໍ້ຕົກລົງ ວ່າດ້ວຍ ວິທີການຄິດໄລ່ດອກເບ້ຍເງິນໃຫ້ກູ້ຢືມ ແລະ ການປັບໃໝ ຂອງທະນາຄານທຸລະກິດ
Summary
This agreement stipulates the calculation methods and penalty measures for loan interest on overdue loans by commercial banks to protect the legitimate rights and interests of borrowers and commercial banks, promote fund raising and transparent and fair investment of funds in production and operation. It consists of nine articles and takes effect from the date of signing.
Articles
Article 1
Purpose. This Agreement stipulates the methods for calculating interest and penalties on loans for customers who are overdue in repayment, in order to protect the legitimate rights and interests of borrowers and commercial banks, and to promote the raising of funds and their transparent and fair investment in production and business activities.
Article 2
Definition of Terms. 1. Loan refers to funds disbursed by a bank in various forms to natural persons or legal entities, such as: loans, overdrafts, advances to customers, and other types of credit; 2. Production and Business Loan refers to loans used for conducting business activities, such as: industry, handicrafts, construction, agriculture, commerce, services, and other sectors; 3. Consumer Loan refers to loans aimed at meeting consumer needs of individuals or households, such as: housing, household goods, vehicles, education, medical treatment, etc., all executed in accordance with the regulations of the Bank of the Lao PDR (Lao Central Bank); 4. Declining Interest Calculation refers to the calculation of interest based on the actual outstanding balance (principal) of the loan on the date the bank performs the interest calculation; 5. Fixed Interest Calculation refers to the calculation of interest based on the total approved loan amount, where such interest is added to the approved loan amount and repaid in equal installments over the term, or repaid as agreed between the bank and the borrower in the loan contract; 6. Overdue Amount refers to the interest, principal, or combined principal and interest that the customer is required to repay to the bank within the repayment period of the repayment schedule, but which the customer fails to repay within the timeframe stipulated in the contract.
Article 3
Application of Interest Calculation Methods for Commercial Bank Loans. The application of interest calculation methods for commercial bank loans shall comply with the following provisions: 1) For the calculation of interest on production and business loans, commercial banks shall use the diminishing balance method. Among these, for production and business loans with a term of one year (inclusive) or less and a loan amount not exceeding 15,000,000 Kip (fifteen million Kip), the bank may use either the diminishing balance method or the fixed installment method, in accordance with the contract agreed with the customer; 2) For the calculation of interest on consumer loans, commercial banks may use either the diminishing balance method or the fixed installment method, in accordance with the contract agreed with the customer.
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