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Amendment of section 38 of Principal Act (interest on loans)
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22. Section 38 of the Principal Act is amended—
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(a) (i) in subsection (1), by the substitution of the following paragraph for paragraph (a):
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“(a) the interest on a loan shall not at any time exceed the rate, specified in the order made under subsection (3) applicable to—
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(i) the credit agreement under which the loan is made, or
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(ii) where there is no credit agreement, the loan;”,
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and
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(ii) by the deletion of paragraphs (b) and (c),
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and
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(b) by the insertion of the following subsections after subsection (2):
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“(3) The Minister may, after consultation with the Advisory Committee and such other body as the Minister considers appropriate in the circumstances, by order specify a rate of interest for the purpose of subsection (1)(a).
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(4) An order made under subsection (3) shall apply to a credit agreement entered into, or, where there is no credit agreement, a loan made—
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(a) after the date on which the order comes into operation, and
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(b) before the date, if any, on which the order next made under subsection (3) comes into operation.
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(5) The Minister shall have regard to the following when making an order under subsection (3):
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(a) the interest rates charged in respect of loans by credit institutions and other providers of credit;
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(b) the interest rates payable by credit unions on deposit accounts and in respect of other sources of funding for loans;
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(c) the need to avoid distortions in competition between credit unions, credit institutions and other providers of credit;
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(d) the financial stability and well-being of credit unions generally.”.
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