INTEREST RATE LIMITS IN CIVIL CONTRACTS
In civil contracts, the maximum allowable conventional interest rate is 3% per month. Any agreement exceeding this limit is automatically reduced. Furthermore, the capitalization of interest (anatocism) is strictly prohibited, and any clause allowing it is considered null and void. Charging interest above the legal cap or engaging in unauthorized capitalization constitutes usury, which may lead to the obligation of restitution and potential criminal sanctions.
MAXIMUM RATES IN THE REGULATED FINANCIAL SYSTEM
Financial Intermediation Entities (EIFs) are subject to interest rate caps established by the Executive Branch through specific regulations. For productive loans, the annual limits are:
- Microenterprises: 11.5%
- Small enterprises: 7%
- Medium and large enterprises: 6%
In the case of social housing, differentiated caps apply under the Interest Rate Control Regime. The effective annual interest rate must include all associated fees and commissions and may not exceed the established limit. Charging for services not actually provided or not expressly requested by the client is prohibited.
INTEREST ON COMMERCIAL TRANSACTIONS
Commercial regulations stipulate that interest, fees, and surcharges must not exceed the limits established by the competent authority. If these are surpassed, the applicable rate will be reduced to the legal interest rate of 6% per annum, without prejudice to additional sanctions.
REGULATORY RISK OF BROAD INTERPRETATION
Given the broad definition of interest in civil law, any extra charge in connection with a loan could be interpreted as a concealed gain for the creditor. This opens the door for broad regulatory interpretations, often in favor of the debtor, thereby increasing the legal risk of financial operations.
RISK MITIGATION STRATEGIES
One way to mitigate risk is to ensure that ancillary services related to a loan are provided by independent, non-affiliated companies through separate contracts. This helps avoid having such charges interpreted as hidden interest. However, this approach still carries legal risk, as regulators may consider the existence of links or indirect benefits to the financial institution, potentially qualifying the operation as usury.
CONCLUSION
Bolivian legislation imposes strict limits on interest rates and prohibits practices that disguise additional charges as gains over capital. Non-compliance may result in criminal penalties and the nullification of contractual clauses that exceed legal thresholds. Therefore, it is essential to structure financial transactions in a way that minimizes the risk of them being deemed illegal interest.
Need assistance reviewing credit agreements or avoiding sanctions related to usury? Contact our legal team today. We provide expert legal advice tailored to current financial regulations in Bolivia.
Frequently Asked Questions (FAQs)
What is considered interest under Bolivian law?
Interest includes any benefit, gain, or profit that a lender receives on loaned capital, including commissions, surcharges, or additional percentages.
What is the legal interest rate limit in civil contracts?
The maximum allowed is 3% per month. Interest capitalization, or anatocism, is prohibited.
What happens if the legal interest cap is exceeded?
It is classified as usury, requiring the excess to be refunded and may result in criminal penalties.
How is the effective rate determined in the regulated financial system?
The effective annual rate includes all fees and commissions related to the loan and cannot exceed the limit set by regulation.
Can additional services be charged in a loan?
Yes, but only if they correspond to actual services, are expressly requested by the client, and do not exceed legal limits. Otherwise, they may be seen as disguised interest.
The content of this article does not reflect the technical opinion of Rigoberto Paredes & Associates and should not be considered a substitute for legal advice. The information presented herein corresponds to the date of publication and may be outdated at the time of reading. Rigoberto Paredes & Associates assumes no responsibility for keeping the information in this article up to date, as legal regulations may change over time.
