Since April 20th, 2020, the one-year LPR has been maintained at 3.85% for 20 consecutive months. The downward adjustment in these two months also means that the upper limit of judicial protection of private lending interest rate has dropped from the previous 15.4% to 14.8%.
What is the impact of the adjustment of the upper limit of private lending interest rate?
On August 20, 2020, the Supreme People's Court held a press conference and issued 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 the Provisions). On the basis of the one-year loan market quotation (LPR) issued by the National Interbank Funding Center authorized by the People's Bank of China on the 20th of each month, the judicial protection upper limit of private lending interest rate was determined, replacing the original "24% and 33% in two lines and three districts".
According to the above provisions, 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 listed interest rate of the one-year loan market when the contract is established.
Xiao Sa, director of China Banking Law Research Association, pointed out in an interview with Zhongxin Jingwei that the upper limit of private lending interest rate depends on the quotation of one-year loan market when the contract is established, so lowering the one-year LPR for two consecutive months is actually lowering the upper limit of private lending interest rate.
Does the adjustment of the upper limit of private lending interest rate have an impact on the ongoing cases? Xiao Sa said that the change of the ceiling has no influence on both borrowers and borrowers in the lawsuit.
"Because the upper limit of private lending interest rate depends on the quotation of one-year loan market when the contract is established, the upper limit has been determined when the contract is established. Changes in the interest rate ceiling during the lawsuit have no impact on the established contract, so it has no impact on both the lender and the borrower. " Xiao Wei said.
Yang Baoquan, a senior partner of BOC Law Firm, told Zhongxin Jingwei that since LPR is variable, the interest rate ceiling is floating. The most direct influence of the change of interest rate ceiling is the calculation of litigation request and execution amount.
He mentioned that according to Article 29 of the Regulations, both lenders and borrowers have agreed on overdue interest rates, liquidated damages or other expenses. The lender can choose to claim overdue interest, liquidated damages or other expenses, or both, but the people's court will not support the part that exceeds 4 times the listed interest rate of the one-year loan market when the contract is established.
Xiao Sa further suggested that when concluding a contract, both borrowers and lenders should check the quoted interest rate in the one-year loan market at that time, and use it as a reference to determine the interest rate of the loan contract, so as to ensure that the contract interest rate concluded by both parties is within the scope of the judicial protection interest rate at that time and can be protected by law.
The decline in interest rates is the general trend.
The "Regulations" point out that these regulations are not applicable to disputes arising from loans and other related financial businesses of financial institutions and their branches established with the approval of financial supervision departments.
It does not apply to financial institutions, and it also makes many institutions breathe a sigh of relief. Especially before, the annualized interest rates of loan products of many consumer finance companies were almost all issued at the upper limit of 24% or even 36%.
After this round of adjustment, the upper limit of judicial protection of private lending interest rate has been reduced to 14.8%. However, many people from consumer finance companies said in an interview with Zhongxin Jingwei that this has little impact on consumer finance companies, but the overall interest rate of consumer finance companies' products may continue to decline in the future.
202 1, many regulatory authorities gave window guidance to financial institutions including consumer finance companies within their jurisdiction, demanding that the product loan interest rate be reduced to below 24%.
A consumer company official told Zhongxin Jingwei that this year, all products with interest rate of 24% or les.
Although the interest rate of loan products of consumer finance companies may fall below 24%, it is much higher than the upper limit of private lending interest rate. In this regard, the above-mentioned person in charge said that the costs of consumer finance companies include capital costs, risk costs, personnel management costs, and scientific and technological investment. The cost of most consumer finance companies is four times higher than LPR.
In the cost structure, the cost of capital affects the pricing of loan products to a certain extent. It is understood that the financing channels of consumer finance companies mainly include shareholder funds, interbank lending, ABS issuance, financial bonds, syndicated loans and so on. As far as financing cost is concerned, ABS gives priority to coupon rate at around 2%-6%; The financing interest rate of financial bonds is low, generally around 3%, and the personal consumption company in coupon rate reaches 7%; The interest rate of syndicated loans is between 3% and 6%.
The above-mentioned consumer finance companies said that the cost of capital obtained by their companies also declined last year, reducing part of the cost burden. "24% is basically no problem. We are still looking for more exploration space. " At the same time, he also stressed that the interest rate adjustment of consumer finance companies is related to many factors such as market, customer base, cost and policy. In line with the general trend of China loan market.
Huang, a senior researcher at Suning Financial Research Institute, analyzed in an interview with Zhongxin Jingwei that the decline in one-year quotation will lead to the decline in financing costs of consumer finance companies, which will then be transmitted to the product side. However, he also stressed that the interest rate of loan products is not completely linked to the financing cost, but also depends on the borrower's credit situation. So generally speaking, the interest rate of loan products should be reduced, but it may not necessarily be reflected in individuals.
How should consumer finance companies deal with the decline in loan interest rates? Huang pointed out that on the one hand, many consumer finance companies are increasing their operations on existing customers, such as introducing membership system, points system and equity system to retain existing customers; On the other hand, some institutions are actively expanding new scenarios and customer groups, and increasing their services to customers in inclusive finance.
The above-mentioned consumer companies believe that the ultimate test of interest rate decline is the fund management and risk control capabilities of various consumer institutions. Finding the right person and operating funds efficiently will bring pressure to consumer finance, but it will also bring
New opportunities.
Related Q&A: Is there an upper limit on the interest rate of bank loans? There is no upper limit for the interest rate ceiling released by the state, that is, there is no upper limit for the bank loan interest rate, so there is no upper limit for the loan interest. However, the loan interest rates of urban credit cooperatives and rural credit cooperatives are still subject to the upper limit management, and the maximum floating coefficient is 2.3 times of the benchmark loan interest rate, and the downward fluctuation of the loan interest rate remains unchanged. According to Article 2 of the Notice on Adjusting Deposit and Loan Interest Rates of Financial Institutions, the floating range of loan interest rates of financial institutions is relaxed, allowing deposit interest rates to float downwards. 1. The loan interest rate of financial institutions (except urban and rural credit cooperatives) is no longer capped. Commercial bank loans and loans managed by policy banks according to commercialization are no longer subject to upper limit management, and the downward fluctuation of loan interest rates remains unchanged. The loan interest rates of urban credit cooperatives and rural credit cooperatives are still subject to upper limit management, with the highest floating coefficient being 2.3 times of the benchmark loan interest rate, and the downward fluctuation of the loan interest rate remains unchanged. Personal housing loans, preferential loans and loans as otherwise stipulated in the State Council, the interest rate does not rise. 2. Establish a downward floating system of RMB deposit interest rate. Financial institutions take the benchmark interest rate of RMB deposits set by the People's Bank of China as the upper limit, and implement the deposit interest rate downward floating system. That is, the lower limit of RMB deposit interest rate is 0, and the upper limit is the benchmark interest rate of deposits of all grades. Taking the adjusted one-year deposit rate (2.25%) as an example, financial institutions can independently determine the one-year deposit rate within the range of 0-2.25%. The deposit interest rate cannot go up. The scope of the deposit interest rate downward floating system includes RMB deposits of enterprises and institutions absorbed by financial institutions and RMB savings deposits of urban and rural residents. Extended data:
Determination of loan interest rate in Article 13 of the General Principles of Loans. The lender shall determine the interest rate of each loan according to the upper and lower limits of the loan interest rate stipulated by the People's Bank of China, and specify it in the loan contract. Article 14 Calculation and collection of loan interest. Lenders and borrowers shall collect or pay interest on schedule according to the loan contract and relevant interest-bearing provisions of the People's Bank of China. When the loan extension period and the original term reach the new interest rate term grade, the loan interest will be charged at the new term grade interest rate from the date of extension. Penalty interest is charged for overdue loans according to regulations. Ministry of Commerce of China-Notice on Adjusting Deposit and Loan Interest Rates of Financial Institutions
Related Q&A: The upper limit of judicial protection of private lending interest rate has been adjusted to 15.4%. what do you think? On August 20th, the Supreme People's Court adjusted the legal interest rate ceiling of individual private lending, that is, from "two lines and three districts" of 20 15 to four times the LPR interest rate in the same period!
First, the main changes of this judicial interpretation
0 1, the upper limit of judicial protection interest rate is lowered by 36%!
According to the judicial interpretation of 20 15 of the Supreme Court, the legal interest rate ceiling is 24% per year, and the vernacular is 2 cents per month.
This time, the maximum interest rate ceiling was set at four times of the one-year LPR. Combined with the latest one-year LPR of 3.85%, the maximum judicial protection limit is annualized 15.4%, which is 35.83% lower than the original judicial protection limit, about 36%!
Of course, LPR will be adjusted in the coming year, and the so-called upper limit of judicial protection will change at the rate of 15.4% every year, but the calculation method is four times that of LPR.
02. Make illegal private lending invalid and decriminalize it.
According to the judicial interpretation of 20 15, if the loan 10 in two years and the accumulated profit exceeds a certain amount, it can be punished as the crime of illegal business operation, and the behavior of private lending will be raised to a criminal offence.
Judging from this new regulation, it is undoubtedly to delete the stipulation that private lending is punishable, and instead to identify illegal lending for profit as invalid.
In other words, illegal lending for profit is invalid, but it is not punishable and does not bear criminal responsibility for illegal business.
Second, why is there such a big adjustment in judicial interpretation soon after its implementation?
According to the objective social situation and legal spirit, there are roughly the following reasons:
0 1, fully respecting the voluntary contract is not only the requirement of the spirit principle of the civil code, but also the objective need to respect the financing of private funds.
Private lending is a civil legal act concluded between other civil subjects except financial institutions whose business is loans, with borrowing funds and repaying principal and interest as the main rights and obligations.
For a long time, private lending is an important part of social capital financing, and it is also a useful supplement to the financing methods of social and economic activities. It has existed in all dynasties, and it is difficult to ban it.
Full respect for legal capital lending between civil subjects and civil subjects is conducive to protecting legal capital lending and promoting the smooth progress of economic activities. At the same time, it is also conducive to cracking down on illegal private lending and regulating private financing. Especially under the impact of the epidemic, multi-channel private financing has shown the advantages of convenience, flexibility, timeliness and efficiency.
02. Private capital lending is a long-term and universal economic behavior, which is reasonable and should not be criminalized.
Undeniably, private capital lending activities are easy to breed evil forces and crimes, which is not conducive to social security and stability.
However, many times, private capital lending still only stays in economic activities. For most people, private capital lending is an effective means to alleviate the short-term financial pressure, which is extremely important for their survival and development and is not easy to lead to criminal offences.
It is a crime to borrow 10 or obtain a certain amount of accumulated income within two years, which is of great benefit to stabilizing social security and improving the efficiency of public security management. However, this one-size-fits-all approach is not conducive to the steady and healthy development of private lending.
Undeniably, private lending, as a financing channel, has long been a necessary supplement to the country's formal finance. We can't solidify all private lending behavior just because some private lending cases have bred evil forces.
03. After the division of the third line and the second district, it aroused strong social repercussions, which was not conducive to the interest rate marketization reform.
The division of the third line and the second district means that 24% of the annualized area is protected by law, and 24%-36% of the annualized area is the default. Such a high interest rate protection line is not conducive to the reduction of the overall interest rate in the market.
It should be said that low interest rate is the trend of capital lending, especially after the vigorous development of internet finance, many legal and standardized internet capital lending platforms have released many financial products with low interest rate. For example, Weizhong Bank's micro-loan is annualized 13.5%, online merchant's bank loan is annualized 18%, and baixin bank's loan is annualized 22%, all of which are lower than the legal protection line by 24%.
Lowering the third line and two districts of private capital lending to LPR4 times is the policy of bank lending 4 times before the reunification, which caters to the trend of low interest rate of capital lending and is conducive to the development and reform of market interest rate of the whole financial industry.
Third, how to treat the annualized interest rate of private lending 15.4%?
0 1, the bank loan interest rate is 4 times in the same period, and the end point returns to the starting point.
199 1 Supreme Court issued a judicial interpretation. The interest rate of private lending can be appropriately higher than the interest rate of similar loans of banks, but it must not be higher than the interest rate of similar loans of banks by 4 times!
20 15 the supreme court issued a judicial interpretation, clarifying that the interest rate of private lending is more flexible "two lines and three districts" instead of "four times the interest rate of bank loans".
In 2020, the Supreme Court held a press conference to reconfirm that the upper limit of judicial protection of private lending interest rate is four times that of one-year LPR loan interest rate.
According to the latest one-year LPR of 3.85%, the upper limit of judicial protection interest rate for private lending is 15.4% annual interest rate!
02. What does annualized 15.4% mean?
Annualized 15.4% is a comprehensive rate!
In other words, the private loan contract stipulates that the loan interest rate is annual interest rate 15.4%, so if there are other expenses, the court cannot support them.
Annualized 15.4% is also applicable to the upper limit of judicial protection of overdue interest rates. If the agreed overdue interest rate is higher than annualized 15.4%, the excess is invalid.
In addition, if the creditor claims overdue interest, liquidated damages and other expenses, the total amount shall not exceed the annual interest 15.4%, and some people's courts will not support it.
03. The annualized rate of15.4% is only applicable to the private lending behavior of non-financial institutions, and cannot constrain the annualized loan interest rate of financial institutions.
The so-called judicial protection ceiling 15.4% in this judicial interpretation is only applicable to the private lending behavior of non-financial institutions, and the lending interest rate of financial institutions is not affected.
For example, the loan interest rate of online merchant bank is 18%, and the loan interest rate of baixin bank is 22% annualized. Although these funds have exceeded the annualized rate of 15.4%, they can still be implemented.
04. Annualized traceability 15.4%
The judicial interpretation does not explain the retrospective effect of 15.4% this year, but this issue may lead to major and numerous disputes after the implementation of the judicial interpretation.
According to the general legal understanding, before the promulgation of this judicial interpretation, the parties, based on their trust in the legal interpretation, and according to the private loan contract concluded by the third line and the second district of the original judicial interpretation, the loan interest rate exceeded the annual interest rate 15.4%. If there is a performance dispute in the later stage, they should make a judgment according to the original judicial interpretation.
Based on the full text, the interest rate of private lending has returned to the starting point, and the interest rate of judicial protection has been greatly reduced by 36%! It reflects the objective needs of interest rate marketization reform and the unstable judicial interpretation. Although commendable, such a changeable judicial interpretation is not conducive to the stability of the law in the hearts of the people, nor to the stability of economic activities.