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Orban: FX Loan Law Heralds Era Of Fair Banking
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(MTI) – Parliament’s approval of a law based on the supreme court’s legal uniformity ruling on foreign-currency-denominated loans may open a new era of fair banking, Prime Minister Viktor Orban said on Friday.
Speaking at the opening ceremony of a pharmaceutical plant in Pilisborosjeno, outside Budapest, Orban called the move of “historic importance”.
From now on “people will see that it is not always the stronger party that is right. The weak can also be right, with the law and justice on his side,” Orban said.
Speaking at a press conference after the parliamentary vote on the FX law, Antal Rogan, the ruling Fidesz party’s group leader, said that the national assembly had done justice by passing the legislation.
The law, based on a June supreme court ruling, nullifies different exchange rates for disbursement and repayment of forex loans as well as unilateral changes to retail loans unless lenders successfully defend such changes in court.
All the money that was swallowed up due to the difference in the exchange rate and one-sided contracts with inflated interest rates will be returned with compound interest thanks to today’s legislation, Rogan said. The original conditions of a contract related to interest are thereby restored, he added.
Based on an average sized loan, a borrower will be able to claw back between 600,000 forints and one million (EUR 2,000-3,300) towards the end of the year. At the same time, the amount of interest repaid will be reduced significantly, Rogan said.
Two parliamentary decisions can be expected to follow. First it will be decided in what form amounts will be returned to borrowers. Second, a decision will be made on forint conversion. This is expected to happen in the autumn session of parliament, Rogan said, adding that the government would ask the Banking Association for consultations in the meantime concerning the system of terms and conditions.
He said that Fidesz was determined that the conversion of FX loans to forint ones should not be made at market rates but at a more favourable one based on the sharing of exchange-rate losses between banks and clients.