Parliament approves law on settlement of bank refunds

The legislation clarifying the settlement of refunds lender institutions will be forced to pay borrowers was approved by the Hungarian parliament yesterday.

The law thouroughly outlines the way banks will be required to settle refunds mandated under the borrowers’ relief legislation approved in the summer. The law also contains a moratorium on interest rate, fee or cost increases until April 30, 2016 at the latest.

The law was passed with 167 votes in favour, one against, and two abstentions. The National Bank of Hungary (MNB) is expected to define the technical details of the implementation. Amounts due to customers will be deducted from their outstanding debt.

The settlement of refunds affects 400 financial institutions and about 1.3m households – approximately 680,000 foreign currency and 650,000 forint loans, Fidesz parliamentary group leader Antal Rogán said earlier this month. For an average foreign currency loan holder, average repayments could fall by 25%, he said.

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