Increase of the rate of refinancing: Could the banks unilaterally change the rate on the previously issued loans?
Since the 16th of December 2014 the key rate of the Bank of Russia has been increased up to 17%. This is reported on the official site of the Bank of Russia.
It is explained in the Bank of Russia that this decision occurs due to the necessity to restrict the essentially increased devaluation and inflation risks. The key rate is a rate on which the Bank of Russia provides loans to the commercial banks for one week as well as is ready to accept from banks money for deposit for the same period. It affects the amount of rates on the bank loans and the inflation rate.
Due to the increase of the interest rate the issue on possibility of the bank to change at its discretion and unilaterally the interest rate on the already concluded loan agreement becomes relevant.
Turn to Federal Law “On Banks and Banking” No. 395-1 of 02.12.1990.
The interest rate on a loan is an essential i.e. obligatory term of the loan agreement (Art. 30 of Law No. 295-FZ).
It states in Art. 29 of Law No. 395-FZ that the lending institutions do not have the right unilaterally to change the interest rates on the loans and (or) the procedure of its definition, the interest rates on the deposits, the commission fee and the duration of these agreements with the clients:
the individual entrepreneurs and the entities:
As exception is made for the cases when the possibility of such change is provided for:
by the Federal Law; or by the agreement with the client.
Therefore, the change of the interest rate in respect of increasing the rate of refinancing on the loan agreement with the individual entrepreneurs and the entities is possible only in the cases provided for by the law or the loan agreement.
The courts frequently support the bank and take the decision on basic of this requirement of the law when considering the arbitration disputes with the lenders on illegality of changing the loan agreement in the concerned situation.
However, not everything is so clear.
The right of the bank to increasing the interest rate on the loan in a case provided for by the law or an agreement shall be justified. It follows from Paragraph 2 of Information letter VAS RF of 26.01.1994 No. ОЩ-7/ОП-48. The court believes that the banks shall act on basic of the principles of reasonability and good faith when exercising the provided for by the loan agreement right to change unilaterally the lending terms:
“According to Art. 310 of the Civil Code of the RF as well as Part 2 of Art. 39 of the Bank Act the interest rates on loans and loan term can be changed by the bank unilaterally in case if it is provided for by the agreement with the lender. However, this provisions do not mean that a Party of the agreement, which was informed of changing the conditions of the agreement and disagreed with such changes, cannot prove that the unilateral change of the agreement conditions upsets the reasonable balance of the rights and the obligations of the parties of the agreement, contravenes the established business usages or violates the guiding private principles of reasonability and good faith”.
Some lower arbitration courts maintain the same attitude.
There is some other situation in respect of the lenders who are individuals.
On the loan agreement concluded with a lender-citizen the lending institution cannot unilaterally reduce the duration of this agreement, increase the amount of the interests and (or) change the procedure of its definition, increase or determinate the commission fee on the transactions. An exception is the cases when the possibility of such change is provided for by the Federal Law.
Therefore, the lenders who are the individuals are in the more stable situation. The change of the interest rate for them on the loan agreement is possible only in cases directly established by the law.