usury — The Central Bank of Cyprus (CBC) has set the reference interest rate for usury at 11.84%. This figure is crucial as it dictates the legal ceiling for interest charges on loans throughout the Republic of Cyprus.
According to the provisions outlined in article 314A of the Cyprus Criminal Code, Cap.154, this reference rate is not merely a statistic; it carries significant legal implications. The law stipulates that any individual or entity providing a loan must not exceed this interest rate. If they do, they risk committing a criminal offence, which can lead to severe penalties.
The specifics of the law clarify that if a lender “receives, collects, charges, stipulates or takes” any financial benefit that surpasses the 11.84% interest rate, they may face a conviction. The penalties for such an offence can include a prison sentence of up to five years, a fine not exceeding €30,000, or both.
This determination by the CBC underscores the ongoing efforts to regulate lending practices in Cyprus and protect consumers from exploitative interest rates. By establishing a clear reference rate, the Central Bank aims to foster a more transparent and fair lending environment.
As Cypriots navigate their financial options, this new rate will serve as a guide, ensuring that borrowers are aware of the legal limits on interest rates. The CBC continues to monitor economic conditions to adjust this rate in accordance with the changing financial landscape.
