The National Bank of Serbia (NBS) unveiled a series of draft amendments to the country’s Banking Act on September 9, including a cap on interest rates, as part of broader efforts to bolster consumer protections in Serbia’s financial sector.  

The proposed legislation, which is now open for public consultation, seeks to introduce significant changes, including a lower statutory default interest rate for overdue financial obligations.

The reforms are designed to align Serbia’s financial regulations with broader EU directives, ensuring that consumer protections are strengthened without stifling market competition.

Under the draft law, interest rates for unpaid obligations would be capped at 12% for dinar-denominated liabilities and 10.25% for those linked to the euro. These caps would replace the current default rates of 14% and 12.25%, respectively.

The NBS explained that the proposed interest cap is designed to align with market conditions and is based on the central bank’s reference interest rates, as well as those of other major central banks.

This approach, according to the NBS, would fulfil the requirements of Directive 2023/2225, particularly Article 31, which requires member states of the EU to adopt measures to curb excessively high interest rates.

The NBS stated that the proposed cap aims to protect consumers from abrupt increases in interest rates, while still allowing for market competition. In the event of a sharp rise in broader market rates, the proposed legislation would act as a buffer to prevent significant disruption for borrowers.

Public consultation on the draft legislation will remain open until September 16, with the final law expected to be submitted to the Serbian parliament later this year.