Section 44A of The Banking Act CAP 488: Limit on interest recovered on defaulted loans

(1) An institution shall be limited in what it may recover from a debtor with respect to a nonperforming loan to the maximum amount under subsection (2).
(2) The maximum amount referred to in subsection (1) is the sum of the following—
(a) the principal owing when the loan becomes non-performing;
(b) interest, in accordance with the contract between the debtor and the institution, not exceeding the principal owing when the loan becomes non-performing; and
(c) expenses incurred in the recovery of any amounts owed by the debtor.
(3) If a loan becomes non-performing and then the debtor resumes payments on the loan and then the loan becomes non-performing again, the limitation under paragraphs (a) and (b) of subsection (1) shall be determined with respect to the time the loan last became non-performing.
(4) This section shall not apply to limit any interest under a court order accruing after the order is made.
(5) In this section—
(a) "debtor" includes a person who becomes indebted to an institution because of a guarantee made with respect to the repayment of an amount owed by another person;
(b) "loan" includes any advance, credit facility, financial guarantee or any other liability incurred on behalf of any person; and
(c) a loan becomes non-performing in such manner as may, from time to time, be stipulated in guidelines prescribed by the Central Bank.
(6) This section shall apply with respect to loans made before this section comes into operation, including loans that have become non-performing before this section comes into operation: Provided that where loans become non-performing before this section comes into operation, the maximum amount referred to in subsection (1) shall be the following—
(a) the principal and interest owing on the day this section comes into operation; and
(b) interest, in accordance with the contract between the debtor and the institution, accruing after the day this section comes into operation, not exceeding the principal and interest owing on the day this section comes into operation; and
(c) expenses incurred in the recovery of any amounts owed by the debtor.

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