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Voluntary Rate Cap for Working Capital Credit to Fall to 11.5%

Banking

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Economic Development Minister Marton Nagy and representatives of the Hungarian Banking Association agreed to reduce the voluntary rate cap for working capital credit for businesses by half a percentage point to 11.5% at a meeting on Thursday, the Economic Development Ministry said, according to a report by state news wire MTI.

The sides agreed on the measure two days after National Bank of Hungary (MNB) policymakers decided to lower the base rate by 75 bp to 12.25%.

The reduction in the voluntary rate cap will be applied from November 2.

The sides agreed that the voluntary cap on APRs for home loans would remain at 8.5%.

The voluntary rate caps were adopted by lenders starting October 9, after talks with Nagy. The minister said the government would commit to weighing the phase-out of the corporate rate cap and to starting a review of the cap on retail home loans if the central bank base rate falls under 10%. He also said the government would back the Hungarian Banking Association's plans and efforts related to the regulation of digitalization in the financial sector.

At the meeting on Thursday, the sides started the discussion of lenders' proposals on digitalization.

Commenting on the proposals, Nagy said banks should "exploit to the fullest" the opportunities offered by digitalizing administrative processes, adopting FinTech solutions, and using artificial intelligence, pointing to their "significant growth potential".

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