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Bosnia and Herzegovina: Decree on Uniform Method of Calculation and Disclosure of the Effective Interest Rate on Loans and Deposits
Law specifying requirements on loans granted by banks and microcredit organizations
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This Decree stipulates a uniform method for the calculation and disclosure of the active effective interest rate on loans granted by banks and microcredit organizations. The Decree states that:
- The effective interest rate is calculated by applying the compound interest account, in a way that the discounted cash flows are equal to the discounted cash outflows of granted loans;
- While discounting, the calendar number of days in a month/year shall be applied;
- The effective interest rate will be applicable on the day of calculation;
- The information on loans granted by banks and microcredit organizations (MCOs), and deposits received by banks, shall contain both information that is included and information that is excluded in the calculation of the effective interest rate;
- The bank and the MCO are obliged to calculate the effective interest rate and disclose it to clients and the public;
- The bank and the MCO must inform clients on loan terms, before the client receives the loan.
The Decree is applicable to banks and MCOs with their headquarters in the Federation of Bosnia and Herzegovina (BiH), and comes into effect on the eighth day after its publication in the Official Gazette of the Federation of BiH.The Decree is signed by the President of the Management Board.
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