Decree on Uniform Method of Calculation and Disclosure of the Effective Interest Rate on Loan and Deposits

Bosnia and Herzegovina

(enacted in 2007)

Decree on Uniform Method of Calculation and Disclosure of the Effective Interest Rate on Loan and Deposits of 2007 specifies calculation and disclosure requirements of interest rates on loans granted by banks and microcredit organizations (MCOs) in the Federation of Bosnia and Herzegovina.

This decree stipulates a uniform method for the calculation and disclosure of the active effective interest rate on loans granted by banks and MCOs.

The decree states that:

  • The effective interest rate is calculated by applying the compound interest account, in a way that the discounted cash flows are equal to the discounted cash outflows of granted loans;
  • While discounting, the calendar number of days in a month/year shall be applied;
  • The effective interest rate will be applicable on the day of calculation;
  • The information on loans granted by banks and MCOs, and deposits received by banks, shall contain both information that is included and information that is excluded in the calculation of the effective interest rate;
  • Bank and MCOs are obliged to calculate the effective interest rate and disclose it to clients and the public; and
  • Banks and MCOs must inform clients on loan terms, before the client receives the loan.