In light of COVID19, the prescribed rate of interest (legal interest) has been changed with effect from 1 March 2020 to 9.75% per annum. The previous rate was 10.00%.
The Prescribed Rate of Interest Act, 1975 provides that where interest bears on debts, the prescribed rate of interest applies, except where a different rate is set by any other law, trade custom or agreement between the parties. The parties can therefore agree to a different interest rate subject to the limitations by any other legislation which makes provision for a specific rate of interest. For example, the National Credit Act prescribes the rate of interest that credit providers can charge, which includes micro-loans.
This interest rate as determined by the Minister is indeed welcomed in light of the socio-economic uncertainty triggered by COVID 19.