Editor | July

Author | Lawyer Wang Qianyu Huaicheng

On August 2th, the Supreme People's Court held a press conference and released the newly revised Provisions of the Supreme People's Court on Several Issues Concerning the Application of Laws in the Trial of Private Lending Cases (hereinafter referred to as Judicial Interpretation of Private Lending), which explicitly revised the upper limit of judicial protection of private lending interest rate to 4 times LPR, greatly reducing the cost of private lending. At the same time, in order to crack down on "routine loan" and "campus loan", we advocate the value orientation of financial service entities and modify the invalid loan contract.

Lawyer Huai Cheng analyzed the following two aspects according to the key clauses of the revised Judicial Interpretation of Private Lending and its revised application.

1

The upper limit of interest rate is changed from 24%

to 4 times LPR

According to Article 26 of the revised Judicial Interpretation of Private Lending, if the lender requests the borrower to pay interest at the interest rate agreed in the contract, the people's court shall support it, except that the interest rate agreed by both parties exceeds 4 times the quoted interest rate in the one-year loan market when the contract is established.

"one-year loan market quotation rate" refers to the one-year loan market quotation rate, that is, LPR, which is issued monthly by the National Interbank Funding Center authorized by the People's Bank of China from August 2th, 219.

first of all, the LPR interest rate has replaced the "two lines and three districts based on 24% and 36%" in the original Judicial Interpretation of Private Lending, greatly reducing the upper limit of judicial protection of private lending interest rate. Based on the one-year LPR of 3.85% published on July 2, 22, the upper limit of judicial protection of private lending interest rate is 15.4%.

Secondly, LPR is a floating interest rate, which is published on the 2th of each month and can be found on the websites of National Interbank Funding Center and China People's Bank. The standard of 4 times is based on the LPR when the contract is established, so when signing the contract, you can check it on the above website.

finally, according to the revised Judicial Interpretation of Private Lending, the sum of the overdue interest rate agreed in the private lending contract and the claimed overdue interest rate, liquidated damages and other expenses shall not be higher than the judicial protection upper limit of the private lending interest rate, that is, 4 times LPR.

2

"routine loan" and "campus loan"

The loan contract will be deemed invalid

At present, there are still some behaviors of issuing loans to the public without the approval of the financial supervision department, which are often intertwined with "routine loan" and "campus loan", seriously affecting the local financial order and social stability, and seriously damaging the legitimate rights and interests of the people and their peace of life.

In the case that Article 14 of the newly revised Judicial Interpretation of Private Lending is invalid, the Supreme Court has increased the case that lenders who have not obtained the loan qualification according to law provide loans to unspecified social objects for profit.

Therefore, "usury" companies that are not qualified for foreign lending should be careful, because once the private lending contract is deemed invalid, the borrower only needs to return the principal, even the capital occupation fee will not be supported, and the previously paid interest will be offset against the principal, and the excess will be required to be returned.

3

Lending with credit funds

The contract is invalid

Another important modification this time is to further restrict the lending with credit funds.

the purpose of this revision is to strictly limit the lending behavior, that is, some enterprises borrow from banks before lending, especially a few state-owned enterprises use their state-owned enterprise background to obtain loans from banks and then change hands to engage in loan channel business, which violates the value orientation of financial service entities.

Therefore, Item 1 of Article 14 of the revised Judicial Interpretation of Private Lending, "The contract is invalid because the original loan from a financial institution was lent to the borrower at a high interest rate, and the borrower knew or should have known it in advance", was amended as "the loan from a financial institution was lent to the borrower", and some previous restrictions were deleted, that is, as long as there was the act of lending from a financial institution, the private lending contract was invalid.

4

Lawyer Huai Cheng suggested

In view of the Supreme Court's downward adjustment of the judicial interpretation protection limit of private lending interest rate, the lawyer put forward the following suggestions for your reference:

1. In order to avoid high interest rate, some "usury" companies will require borrowers to pay part of the interest in cash, without issuing a receipt, or advance the interest that is not protected by law by beheading.

2. It is suggested that lenders who are not qualified for lending, whether companies or natural persons, should carefully engage in regular foreign borrowing afterwards. Because the state is cracking down on illegal lending such as "routine loans" and "campus loans", after the private lending contract is deemed invalid, the court will only support the return of the loan principal, but not the occupation fee, or determine the occupation fee according to the process degree of both parties.

● For the related issues involved in this article, you can also go to WeChat official account, a lawyer in Huaicheng, and click "Ask" or "Find a lawyer" at the bottom of the page to exchange views with lawyers.

Applicable law:

Provisions of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Private Lending Cases

Article 14 In any of the following circumstances, the people's court shall declare the private lending contract invalid:

(1) taking loans from financial institutions for lending;

(2) lending funds obtained by borrowing from other profit-making legal persons, raising funds from employees of the unit, or illegally absorbing deposits from the public;

(3) Lenders who have not obtained the loan qualification according to law provide loans to unspecified social objects for the purpose of making profits;

(4) the lender knows or should know in advance that the borrower is using the loan for illegal and criminal activities and still provides the loan;

(5) violating the mandatory provisions of laws and administrative regulations;

(6) violating public order and good customs.

article 26 if the lender requests the borrower to pay interest at the interest rate agreed in the contract, the people's court shall support it, except that the interest rate agreed by both parties exceeds four times the quoted interest rate of the one-year loan market when the contract is established.

the "one-year loan market quotation rate" mentioned in the preceding paragraph refers to the one-year loan market quotation rate issued by the National Interbank Funding Center authorized by the People's Bank of China on August 2, 219.