[Explanation] Starting from August 20, 2020, the upper limit of judicial protection for private lending interest rates has been adjusted to 1-year LPR, which is four times the quoted interest rate of the loan market, which is currently 15.4%, to replace the original "24% and 36%" The two lines and three districts are the benchmarks.
[Explanation] On August 20, the Supreme Law held a press conference and issued the "Decision of the Supreme People's Court on Amending the Regulations on Several Issues Concerning the Application of Laws in the Trial of Private Lending Cases". The "Decision" clarified that the upper limit of judicial protection for private lending rates will be significantly reduced, and the private lending rates will gradually be adapted to the actual level of China's economic and social development.
[Concurrent] He Xiaorong, Vice-Ministerial Full-time Member of the Judicial Committee of the Supreme People's Court
The national interbank lending center authorized by the People’s Bank of China to issue four times the one-year loan market quote rate (LPR) as the standard to determine the upper limit of the judicial protection of private lending rates, replacing the original "Regulations" % And 36% as the benchmark, the two-tier and three-zone regulations have greatly reduced the upper limit of judicial protection for private lending rates, and promoted private lending rates to gradually adapt to the actual level of China’s economic and social development. Taking the calculation of 4 times the 3.85% quoted interest rate of the one-year loan market released on July 20, 2020 as an example, the upper limit of the judicial protection of the private lending interest rate is 15.4%, which is a large margin compared to the past 24% and 36% Decline.
[Explanation] According to reports, in the process of revising the judicial interpretation, the Supreme People's Court implemented the "Civil Code" on the principle of "prohibiting usury" and made corresponding adjustments to relevant provisions.
[Concurrent] He Xiaorong, Vice-Ministerial Full-time Member of the Judicial Committee of the Supreme People's Court
One is to continue to implement more stringent principal and interest protection policies. Second, the overdue interest rate agreed by the parties must not be higher than the upper limit of judicial protection for private lending interest rates. The third is that the sum of overdue interest rates, liquidated damages, and other expenses claimed by the parties must not exceed the upper limit of judicial protection for private lending interest rates.
[Explanation] He Xiaorong introduced that in the process of improving judicial policies, the Supreme Law also paid attention to the fact that all sectors of the society have more opinions on the behavior of issuing loans to the public under the name of "private lending" without the approval of financial regulatory authorities. Behaviors are easily intertwined with "routine loans" and "campus loans", and the newly issued "Decision" also provides for this.
[Concurrent] He Xiaorong, Vice-Ministerial Full-time Member of the Judicial Committee of the Supreme People's Court
The Supreme People’s Court adopted this opinion after careful study, and added one of the five situations in which the People’s Court found the loan contract invalid, that is, the third paragraph of Article 14 "Lenders who have not obtained loan qualifications in accordance with the law can make a profit. "Providing loans to unspecified social objects for the purpose" shall be deemed invalid.
Reporter Shan Lu reports from Beijing
Editor in charge: [Li Yuxin]