Dear Clients, Friends and Businesses locally and abroad,
On 26 June 2020, the Minister of Justice and Correctional Services published a reduced prescribed rate of interest (legal interest), for the purposes of Section 1(1) of the Prescribed Rate of Interest Act (“the Act”).
The rate of interest has dropped from 9.75% to 8.75% , with effect from 1 May 2020.
Section 1(1) of the Act 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 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.
If you have any questions in this regard, please do not hesitate to contact Marie-Lou at email@example.com