Romania's Constitutional Court invalidates bills capping interest rates on loans

Romania’s Constitutional Court accepted the objections raised by the opposition parties against three bills with significant impact on the local banking sector, which had been passed by the ruling coalition MPs in the Chamber of Deputies on December 19, Profit.ro reported.

Besides the “greed tax” on financial assets, the three bills also raised major concerns among local banks.

The first law capped interest rates on the retail loan (mortgage and consumer). A second law regulated the regime for non-performing loans (NPLs) allowing the buyers of such loans to recover from debtors at most twice the price paid to the initial creditors. The third law reduced the power of creditors obliging them to ask for court orders to enforce their claims. Separately, the claims including penalties and interest cannot exceed the principal of the debt at the time of the default by more than 50%.

The opposition parties, National Liberal Party (PNL) and Save Romania Union (USR), objected to the bills arguing that they breach ownership rights and the freedom to do business and lack consistency. They also said that the laws have no real grounds and that the arguments in favor of these laws “throw anathema on an economic sector [banking] and start from an absolute and erroneous assumption of abuses committed against consumers.”

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