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Central bank proposes rules to make loan pricing more transparent

The National Bank of Hungary on Monday proposed the introduction of regulations that would made the pricing of loans more transparent.

The aim of the proposals, made to the government late August, is similar to an eight-point plan to help troubled borrowers by two government MPs, but the central bank wants to keep the business environment predictable and does not wish to hurt banks' propensity to lend, the MNB said.

The MNB proposes that, in the case of retail loans, banks should either not be allowed to raise the margin over a reference interest rate or they should be required to extend interest periods to increments measurable in years. These regulations should also be applied to banks' existing stock of loans.

Banks should also be prohibited from widening exchange rate margins during the run of loans, limits ought to be placed on margins and borrowers should be allowed to make repayments in foreign currency.

The MNB has sent the proposals to the National Economy Minister in a letter on August 27 and to the head of Hungarian financial market regulator PSzÁF. If the government accepts the proposals, the economy minister must see the proposals are written into the law, the MNB said. (MTI-Econews)