DECISION on the uniform manner of calculation and reporting of effective interest rate on loans and deposits

Transcription

1 Pursuant to Article 44 paragraph 2 point 3 of the Central Bank of Montenegro Law (OGM 40/10, 46/10, 06/13) an in conjunction with Article 89 of the Banking Law (OGM 17/08, 44/10) an Article 8 of the Law on Consumer Loans (OGM 35/13), the Council of the Central Bank of Montenegro, at its meeting hel on 25 October 2013, passe the following DECISION on the uniform manner of calculation an reporting of effective interest rate on loans an eposits Article 1 This Decision shall prescribe uniform manner of calculating an reporting the lening interest rates on loans an eposit effective interest rate on receive eposits. Article 2 The Decision shall be applie by: 1) banks an creit unions, for loans, incluing consumer loans an receive eposits; 2) microcreit financial institutions, for loans, incluing consumer loans, an 3) other creitors an creit intermeiaries, for lening an intermeiation services pursuant to the law regulating consumer loans. Article 3 Terms use in this Law shall have the following meanings: 1) creitor means bank, creit union, microcreit financial institution, or any person who grants grant consumer loans pursuant to the law regulating consumer loans; 2) epository means bank an creit union; 3) customer means person who is a client of a bank, creit union or microcreit financial institution within the meaning of the law regulating banking operations an the person who is a consumer within the meaning of the law regulating consumer loans; 4) Compoun interest account means the interest account where the calculate interest for the first accounting perio is ae to the initial principal, an in the next accounting perio interest is calculate on the initial principal increase by the interest amount from the first perio, an in each subsequent interest perio, interest is calculate on the remaining principal increase by calculate interest from the previous interest perio, i.e. interest is calculate on interest (so-calle anatocism). 5) Decursive interest calculation means calculation whereby interest is calculate an impute to the principal, i.e. pai at the en of the accounting perio. With this metho interest is calculate at the en of the perio from the initial amount, i.e. from the principal at the beginning of the basic capitalization perio. 6) Discounting means resuming all future inflows an outflows to the current value base on specific loan or eposit agreement. 7) Cash collateral means loan security instrument in cash eposite with the creitor bank, in the manner efine in the loan agreement; 1

2 8) Loan repayment scheule means a scheule summary of all chronologically presente cash flows an outflows arising from loan agreement with the purpose of informing customers an creitors, i.e. upating the realization of their rights an obligations. 9) Deposit payoff scheule means a scheule summary of all chronologically presente cash flows an outflows arising from eposit agreement with the purpose of informing customers an epositories, i.e. upating the realization of their financial rights an obligations. 10) Maturity perio means part of accounting perio that remaining from the moment of monitoring specific loan or eposit up to the moment of its final collection or payoff etermine in the agreement between customer an creitor/epositor. Article 4 Effective lening interest rate shall report the expenses pai by a customer to the creitor when granting an uring the loan repayment, while the effective lening interest rate shall report the expenses pai by a epository to the creitor realise through payoffs to the client on the basis of receive eposit. Effective interest rate shall report total loan/eposit expenses, expresse as an annual percentage of the total amount of loan/eposit. Article 5 The uniform manner of calculating an reporting effective interest rate on loans an eposits is base on compoun interest account, ecursive calculation, an iscounting base on calenar number of ays of the month an of the year. Effective interest rate on loans with cash collateral shall be aitionally ajuste by a single equivalent of iscounte cash flows an outflows base on cash collateral. Effective interest rate shall be reporte on the annual basis, with two ecimals, rouning up to the secon ecimal. Article 6 Information on interest rates on loans an eposits, publishe by creitors or epositaries in their premises, as well as in commercials an avertisements through public meia, brochures an the like that inform, irectly or inirectly, on interest rate or other amount forming a part of the loan or eposit price, must inclue effective interest rate corresponing to the nominal interest rates. Effective interest rate shall not be less prominent than other information on loan or eposit an, when publishe, the term effective interest rate must be use, or the abbreviation EIR if the term is the repeate. The information on the effective interest rate shall be isclose to the customer in writing before accepting the offer or prior to signing the loan or eposit agreement. Informing the customer on the effective interest rate to consumer loans shall be one using the form for informing on the consumer loan, etermine by the specific seconary legislation passe by the Central Bank, pursuant to the law regulating consumer loans. 2

3 Informing the on the effective interest rate to eposits an loans that o not belong to the category of consumer loans may be one using the form from paragraph 4 above, or in other appropriate manner. Article 7 When making a loan or eposit agreement bank, the loan repayment scheule or the eposit payoff scheule shall be compile containing clearly efine effective interest rate, an one copy shall be elivere to the customer, an one copy will be kept in the creitor s or epository s ocumentation. Article 8 Loan or eposit agreement shall contain corresponing provision that shall clearly state that the customer is informe on loan or eposit terms an effective interest rate, an that he/she has been elivere the loan repayment or the eposit payoff scheule. Article 9 Elements for calculation of the effective interest rate, the manner of calculating an reporting effective interest rate an minimum contents of the loan repayment scheule or the eposit payoff scheule shall be closely regulate in the Methoology for Calculation an Reporting of Effective Interest Rate to Loans an Deposits, which makes an integral part of this ecision. Article 10 The Decision on the Uniform Manner of Calculation an Reporting of Effective Interest Rate on Loans an Deposits (OGRM 48/03, 55/03) shall be repeale with effect from the ate of application of this ecision. Article 11 This ecision shall enter into force on the eighth ay following that of its publication in the Official Gazette of Montenegro, an it shall be applie from 1 February THE COUNCIL OF THE CENTRAL BANK OF MONTENEGRO Decision no /49-2 Pogorica, 25 October 2013 CHAIRMAN GOVERNOR Milojica Dakic, m.p. 3

4 Methoology for calculation an reporting of effective interest rate on loans an eposits I. Basis for uniform manner of effective interest rate calculation Basis for uniform manner of loans an eposits effective interest rate calculation consists of compoun interest account an ecursive interest calculation. Uniform manner of effective interest rate calculation is base on the net present value metho. By applying the effective interest rate, iscounte cash inflow equals to the iscounte cash outflows referring to loans an receive eposit. Effective interest rate is the interest rate, by which application the iscounte series of net cash flows is equal to zero. Effective interest rate on loans which use cash collateral as security instrument is aitionally ajuste with single equivalent of the impact of iscounte cash inflows an outflows base on cash collateral that is use to secure loan collection. In terms of loan relation, net cash flow on loans in specific perio represents a ifference between all payments of the customer an all payoffs to the customer over that perio. Cash flows inclue any cash transfers between customer an creitor, an occasionally, thir party that is irectly relate to loan approval, or forms a part of loan terms (e.g. payments of principle, instalment, fee for loan approval, fee for loan servicing, etc.) or qualifies loan approval (fee for processing loan request). Similarly, in eposit relation, net cash flow uring a specific perio of time represent the ifference between any payments to eposit recipient an any payoff to epositors, over that perio. II. Preparation of repayment/payoff scheule When establishing loan relation, creitor is haning a repayment scheule to the customer, an when establishing eposit relation, the epositor is haning a eposit payoff scheule to the customer, without aitional columns for effective interest rate calculation with clearly presente effective interest rate. Aitional columns for effective interest rate calculation show: net cash flow, iscounte net cash flow, iscounte loan isbursements an iscounte cash collateral flows. Creitor, i.e. epositor encloses the repayment/payoff scheule with aitional columns for interest rate calculation to its loan, i.e. eposit ocumentation. Heaer of the repayment/payoff scheule (for loan or eposit agreement or for customer information) must inclue name an aress of the creitor, i.e. epositor, an contact information. Repayment/payoff scheule shoul also inclue preparation ate an a note that the effective interest rate is vali as at repayment/payment scheule preparation ate. Repayment/payoff scheule, hane to the customer when signing a loan, i.e. eposit agreement has to inclue creitor s, i.e. epositor s seal, as well as the signature of responsible person. Repayment/payoff scheule preparation is base on assume regular transaction flows (cash flows), which implies accuracy of all parties in execution of all obligations from the agreement. Agreement is consiere vali for the perio in which it was conclue. For 4

5 the purpose of this methoology, it is assume that the contracting parties are fulfilling their obligations uner the agree terms an within the maturity perio. For example, if a loan agreement prescribes higher interest rate in case when the customer oesn t regularly repay the loan, that fact shoul be isregare, an repayment/payoff scheule shoul be evelope base on the interest rate prescribe for the regular loan repayments. For loan or eposit agreements that inclue clauses on variability of the interest rate as well as fees an commissions that are part of the effective interest rate calculation, the effective interest rate is calculate base on the assumption that the interest rate an other fees uring the contracting perio will remain fixe in relation to the initial interest rate. Repayment/payoff scheule must inclue nominal interest rate, with explanatory note stating whether the interest rate is fixe or variable. Regaring trial calculations of effective interest rate on loans, an for purpose of informing the customer, it is assume that hypothetical loan from the example is release on the first ay of the month, an that the intercapitalise interest is calculate for at least one month. If the nominal interest rate, fees an commissions, use for the calculation of the effective interest rate, change uring the use of the loan or over the epositing perio, creitor, i.e. epositor is ue to inform customers on the change before its implementation by means of public announcements or other appropriate manner (notice boar in bank premises, abstracts, etc.). Foreign currency loans an eposits are shown in respective currency. Loans an eposits in EUR, with foreign currency clause, are shown in EUR, accoring to the exchange rate vali on the repayment/payoff scheule preparation ate. Exchange rate of the previous conversion must be state in the repayment/payoff scheule. If more than one benchmark exchange rate is use (e.g. buying exchange rate when granting the loan, an selling exchange rate when repaying the loan), each of the exchange rates use, shoul be state in the repayment/payoff scheule, as well as the explanation of the use of specific exchange rates. Exceptionally, if the same reference exchange rate is use for release of the loan an loan repayment, an for the acceptance an payoff of eposits (e.g. average exchange rate of the CBCG), loans an eposits with foreign currency clause can be shown in foreign currency (instea of EUR), as at the ay of rearmament/payoff scheule evelopment. Foreign currency loans an eposits with fees an commissions that are etermine an pai in EUR, when calculating the effective interest rate, nee to be converte in foreign currency base on the mean exchange rate vali on the repayment scheule ate. III. Calculation of effective interest rate on loans by the repayment scheule Effective interest rate on loans is calculate by using the loan repayment scheule (loan repayment scheule template is provie in the annex of this methoology) an by using the tentative metho an linear interpolation, as well as calculator or appropriate computer program (e.g. Excel). Proceure is ientical as the proceure for general etermination of internal yiel rate. Loan repayment scheule (hereinafter: loan repayment) inclues the following columns: 5

6 1. Perio marks the serial number of the perio of specific cash flow. zero perio is the perio of the first cash flow or the agree ate of loan release/isposal, epening what perio comes first. Last perio is the perio of the final cash flow. 2. Date marks the exact ate of the cash flow, because the effective interest rate is calculate accoring to the number of calenar ays of the month an 365/366 ays of the year. For the loans withrawn in instalments, customer nees to state planne ates of instalments withrawals, an their amounts. 3. Loan this column shoul inclue loan amount, or part of the loan (instalment) to be pai, on the ate of the certain payment, or when the customer expects to withraw iniviual instalment or entire loan. Repayment scheule of loans withrawn in instalments nee to state the total loan amount. 4. Other payoffs this column shoul inclue other payoffs execute by the creitor an base on internal proceures, except payoff of cash collateral an interest on place cash collateral. 5. Annuity can be equal or variable. Repayment scheule must specify annuity components. 6. Instalment this column is for the amount of principal repayment, pai from annuity in each perio. 7. Interest this column inclues the amount of interest on the remaining ebt, an intercapitalise interest. Repayment scheule heaer must specify the nominal interest rate, explaining whether the interest rate is fixe or variable. If the interest rate is variable, this fact is isregare in calculation an presentation of effective interest rate. In this case, calculation of effective interest rate is one by applying the nominal interest rate which is vali on the calculation ate. 8. Other expenses this column is for all other expenses incurre by the customer, an irectly relate to the loan, incluing: 1) for consumer loans: - Fees for loan request processing; - maintenance fee for the account which clearly notes payment transactions an the use amount of loan, expenses for using payment funs, an for payment transactions the use amount of loan an other expenses referring to payment transactions, except if opening of the account is optional an if account expenses are clearly an separately presente in the loan agreement or other agreement conclue with the consumer. - Fees for loan maintenance, loan servicing, an statements; - Insurance premium an other expenses referring to loan security instruments, if obtaining that collateral represents a preconition for approving the loan, - Other similar fees an commissions irectly relate to the loan. 2) for other loans: - fee for processing the loan request, - fees for granting the loan (payment operations expenses), - fee for loan maintenance, loan servicing, an statements, 6

7 - fee for unrawn loan amount for framework an other loans, - Other similar fees an commissions pai to the creitor by the customer. Calculation of effective interest rate exclues: 1) for consumer loans: - Fees for public-legal authentication of ocuments; - Default interest or any other expenses which may rise from client s acting contrary to terms from the loan agreement; - Post, telephone an telegraph expenses, an - Other similar fees an commissions. 2) for other loans: - Loan security instruments expenses (expenses for real estates value assessment, expenses for booking in the plege on real estates an movable assets serving as loan security instrument, fees for collecting eviences on real estates ownership serving as loan security instruments, expenses for guarantees etc.); - Fees for public-legal ocuments authentication; - Fees for obtaining ifferent certificates, confirmations, licenses an ecisions of competent boies an authorities; - Default interest or any other expenses which may rise from client s acting contrary to terms from the loan agreement; - Postage, wire an fax expenses, an - Other similar fees an commissions. In terms of consumer loans, if in the moment of publishing of services or informing the customer, pursuant to Article 6 of this Decision, the creitor is not familiar with the amount of insurance policy expenses or about other loan security instruments expenses, which represent manatory conition when granting the consumer loan, the creitor properly informs the customer that this loan collateral represents a conition for granting the loan an that expenses referring to that collateral are not inclue in presente amount of the effective interest rate. In the moment of publishing the services or informing the customer, pursuant to Article 6 of this Decision, the creitor properly informs the customer about the type of expenses referring to the loan, but are not inclue in the calculation of the effective interest rate, as well as about the amounts of these expenses, if the customer is familiar with them. 9. Loan balance this column states loan balance in a certain perio. It is equal to the loan amount ecrease by pai-off principal (cumulate instalments). 10. Cash collateral flows this column states any cash flows relate to cash collateral payments an payoff of cash collateral, contingent expenses relate to cash collateral an contingent interest on cash collateral, positive when the cash flow is irecte from the customer to epositor (payment), an negative when the cash flow is irecte from the epositor to the customer (payoff or interest). 11. Description states summary of cash flow uring a certain perio. 7

8 12. Net cash flow represents the sum of instalments (column 7), interest (column 8) an other expenses (column 9) - positive cash flow, ecrease by loan amount (column 4) an other payoff (column 5) - negative cash flow uring a certain perio. All amounts in columns 4 10 are reporte as positive. Net cash flow can be positive or negative, positive marking net asset inflow to the creitor (payments) an negative marking net asset (payoff). 13. Discounte net cash flow this column inclues amounts that are obtaine by iscounting net cash flows from column 12 with annual interest rate of loan expense (percentage), using the following formula : t PGS NNTk NNT k means net cash flow in certain perio, while PGS in iscounte factor means annual rate of loan expenses: /t in exponent is sum of the following components: - share of number of ays starting from zero perio to December 31 of the same year, in number of ays in year of zero perio, - Number of years between the year of cash flow that is iscounte an year of zero perio, not counting the two mentione years, - share of number of ays beginning with ate of the perio of cash flow that is iscounte to December 31 of the previous year, in the number of ays in a year of the cash flow that is iscounte. Mathematical formula for calculation of /t may be expresse as follows: t yyyy(0) at(0) t(0) t(0)= 1+yyyy(0) yyyy(0) t(= 1+yyyy( yyyy( at( ( yyyy( 1) yyyy( yyyy(0) 1 t( In this formula, at(0) is ate of zero perio, while at( is the ate of the perio in which there is the cash flow that is iscounte. Excel formulas can be use for calculation (e.g. with the ates in the format given in the formula above). D/t represents, in fact, number of years (not necessary the whole number) between the ates of zero perio an ate in which is shown cash flow, which is iscounte, i.e. length of that perio expresse in years. Since PGS represents the rate which is yet to be calculate, a process for its calculation is mentione. Repayment scheule ens with row Total, which is establishe after the last cash flow in the last perio. In that row, in the column Discounte net cash flow all iscounte net cash flows form iniviual perios are ae. PGS represents an approximate solution with two ecimals of the following equation: 8

9 k PGS t NNT 1 k A metho of attempt or metho of linear interpolation may be use for its calculation, by using calculator of appropriate computer program. Obtaine annual rate of loan expenses is not shown in the repayment scheule but is use for the calculation of the effective interest rate using the following formula: EKS UDIK PGS UDIK UDTSP The meaning of symbols UDIK an UDTSP is explaine in the points 14 an Discounte loan payments in this column there are iscounte values of loan payments referre to in the column 4. When iscounting, previously calculate PGS is use an it is iscounte accoring to the zero perio by using the following formula: DIK k k ) t PGS ( IK, whereby, DIKk means iscounte loan payment in a certain perio, IKk means loan payment is a certain perio, while other symbols have the meaning referre to as in the point 13. Sum of iscounte loan payments: UDIK k DIK k, which is use in calculation of the effective interest rate escribe in point 13, is on the cross section of the row Total an column Discounte loan payments. 15. Discounte flows of cash collateral this column inclues iscounte values of cash collateral flows referre to in the column 10. Previously calculate PGS is use in iscounting an it is iscounte accoring to the zero perio using the following formula: DTSP k k ) t PGS ( TSP. whereby, DTSP k stans for iscounte flow of cash collateral in a certain perio, TSPk cash collateral flow in a certain perio, while other symbols have the meaning referre to as in point 13. 9

10 Sum of iscounte cash collateral flow: UDTSP k DTSPk, which is use in calculation of the effective interest rate escribe in point 13, is on the cross section of the row Total an column Discounte cash collateral flows. Repayment scheule that is istribute to the customer shoul not encompass supporting columns 12 to 15 an annual interest rate of loan expenses that are use for effective interest rate calculation. Repayment scheule that is attache to the loan ocumentation inclues these supporting columns, as well as PGS. There is no nee for filling blank columns. Obtaine effective interest rate shall be shown in repayment scheule with two ecimals, rouning up to the secon ecimal an it shoul not be less notice than other ata. As a rule, the effective interest rate at least equals to the agree nominal interest rate. Exceptionally, if the effective interest rate, calculate in line with the provisions of this Decision, is lower than the agree interest rate or cannot be calculate (e.g. ue to relatively high cash collateral amount, serving as loan collateral in relation to the amount of that loan) the creitor is oblige to inform the customer an provie explanation on the reasons why the effective interest rate is lower, i.e. why it oes not have economically logical explanation (e.g. when it has negative value or when it cannot be calculate). Repayment scheule shall inclue currency of the reporte cash amounts. Repayment scheule is not neee for loans on current account (so calle allowe overraft ) since these loans are repai from the inflows that arrive first on the customer s account. For the purpose of calculating an reporting effective interest rate that refers to these loans, only nominal interest rate is inclue in calculation. If creitor is charging ifferent interest rates for ifferent amounts of allowe overrafts, it is necessary to calculate an report whole scale of impute effective interest rates, with precise guiance of marginal amount of overrafts up to which certain effective interest rate is applie. Creitor is also oblige to inform the customer on other possible fees, commissions an similar cash flows relate to this type of loan. These rules also apply to all other framework loans such as revolving framework loan on creit cars, etc. If the ates of the withrawal of funs cannot be etermine in avance for agree framework creit lines, any withrawal of funs is consiere a special loan, for which repayment scheule with reporte effective interest rate is evelope. If certain loan is grante in several instalments, fee for signing the agreement, maintaining the account an other fixe fees or those fees that are tie to the total amount of loan, shoul be ivie by iniviual instalments proportionally by their amount, an than impute proportional portions of these fees an commissions shoul be inclue in effective interest rate calculation on actual maturity ate. There is no nee to evelop repayment scheule, or to report effective interest rate for acceptance loans, factoring an financial leasing, for loans on creit cars that are istribute an signe on selling places as well as for manatory operations. 10

11 IV. Calculation of effective interest rate on eposits using repayment scheule Effective interest rate on eposits is calculate using eposit payoff scheule (the form of the eposit payoff scheule is attache to the methoology), applying the metho of attempt an linear interpolation using calculator or other appropriate computer software). The process is ientical to etermination of general internal rate of return. The eposit payoff scheule (hereinafter: payoff scheule) contains the following columns: 1. Perio means orinal number of the perio in which certain cash flow is recore. The zero perio is the perio of the first cash flow. The last perio is the one in which the last cash flow occurs. 2. Date means the correct ate of cash flow, since the effective interest rate is calculate accoring to the calenar number of ays in month an 365/366 ays in year. For eposits that are pai in/out in instalments (e.g. resiential savings, pension savings, rent savings an the like) it woul necessary to request from the client to state the projecte ates when the payment in/out shoul occur in instalments, an the amount of expecte payments (if these were temporary payments). 3. Deposit amount means the eposit amount i.e. a portion of eposit (instalment amount) that nees to be pai in, on the ate when it is certain that the payment will be mae, i.e. when the client is expecte to pay in the eposit. As regars the eposits pai in instalments, the payoff scheule shoul contain total amount of eposit an inication that these are expecte payments. 4. Payments on behalf of customer this column inclues approvals on behalf of customer that are assigne to eposit (e.g. amount of assigne interest rate, state incentive funs, bonuses assigne uring the contractual perio an the like). 5. Other payments this column inclues other payments that the epositor (owner of the funs) executes upon epository s request, base on epository s internal regulation (e.g. account maintenance fee). 6. Deposit amount for payoff this column inclues amount of eposit that is pai out as at the ate when it is certain that the payoff will be mae (e.g. after the expiry of time eposit agreement). 7. Interest rate amount this column inclues interest rate amount to be pai in contractual perios. 8. Payments on eposit this column inclues clients inebteness that is suspene against the eposit (e.g. suspension of the account maintenance fee). 9. Other payoffs this column inclues other payoffs that the epository is paying to the epositor per each eposit (e.g. payment of the eposit premium conitione by fulfilment of certain conitions by epositor, or other similar payoffs). If the epository pays particular eposit premium (bonus), it is obligatory to state the percentage or the flat rate of the premium in the payment scheule. 11

12 10. Deposit balance eposit amount in particular perio is written in this column. It is equal to the amount of pai eposit increase by assigne interest rate, i.e. other imputes an than ecrease by fees that the bank suspens from that account. For accounting effective interest rate, it is consiere that total amount of eposit with assigne interest rate is pai after the expiry of the time eposit agreement. 11. Description inclues summary of cash flow in particular perio. 12. Net cash flow is a sum of pai eposits (column 4) an other payments (column 6) (positive cash flow), ecrease by sum of the eposits for payoff (column 7), interest rate amount (column 8) an other payoffs (column 10) (negative cash flow) uring a particular perio. For the purpose of this Methoology, payments on the behalf of the customer (column 5) an payoffs by eposit (column 9) o not enter into the calculation of the net cash flow. All amounts in columns 4 through 11 are reporte by positive sign. Net cash flow may be positive or negative sign, where positive sign marks net inflow of funs in the bank (payments) an negative sign marks net outflow of funs from the bank (payoffs). For the nees of calculation of effective interest rate, it is consiere that the epositor after the expiration ate of time eposit shall withraw available eposit with assigne interest an other payments (such as premium). 13. Discounte net cash flow this column inclues amounts generate by iscounting net cash flows from column 12 with require effective interest rate using the following formula: t PGS NNTk NNT k means net cash flow in particular perio, while PGS in iscounte factor means effective interest rate; /t in the exponent means the sum of the following components: - part of number of ays starting from the zero perio to 31 December of the same year in number of ays in year of the zero perio, - the number of years between the year that is iscounte an the year of the zero perio without counting the two mentione years, an - Part of number of ays from with ate of the perio of cash flow that is iscounte to 31 December of the previous year, in number of ays of cash flow that is iscounte. Mathematical formula for calculation of /t may be expresse as follows: t yyyy(0) at(0) t(0) t(0)= 1+yyyy(0) yyyy(0) t(= 1+yyyy( yyyy( at( ( yyyy( 1) yyyy( yyyy(0) 1 t( Dat(0) is the ate of the zero perio an at( is the ate of the perio of the cash flow that is iscounte. Formulas in Excel files may be use for calculation (with the ates in 12

13 the format given above). D/t represents number of years (not necessarily the whole) between the ates of the zero perio an the ate of cash flow that is iscounte is given, i.e. length of that perio is expresse in years. Since EKS is effective interest rate that nees to be calculate, the text below explains the process of its calculation. The payoff scheule ens with category Total, which is etermine after the last cash flow in the last perio. All iscounte net cash flow from particular perios are summe in that row of the column Discounte net cash flow. Effective interest rate is approximate solution of the following equation, roune up to the secon ecimal. k EKS t NNT 1 k Metho of attempt an linear interpolation may be use for the calculation of this equation, using calculator or appropriate computer programme (e.g. Excel). The resulting effective interest rate is reporte in Repayment scheule, with two ecimals an rouning up to the secon ecimal an it may not be less visible than other ata. Payoff scheule that is given to the client shoul not contain supporting columns 12 an 13 that are use for calculation of the effective interest rate. The payoff scheule that is attache to eposit ocumentation inclues these columns. Blank columns nee not be fille in. Repayment scheule inclues the currency in which the amounts are reporte. Repayment scheule is not neee for current account or gyro account (so calle transaction accounts) an savings an eman eposit; it is enough to note in the eposit agreement that the effective interest rate is equal to nominal interest rate. In this case, only nominal interest rate is inclue for the purpose of calculating an reporting effective interest rate. If a epository is charging ifferent nominal interest rates for ifferent balances on these accounts, it is necessary to calculate an report the whole scale of assigne effective interest rates, with precise guiance of marginal amount on these accounts up to which iniviual interest rate is applie. The epository is oblige to inform the client on possible other fees, bonuses an similar cash flows regaring these accounts. 13

14 Creitor: LOAN REPAYMENT SCHEDULE Aress: Phone/Fax Currency Annuity Loan amount Nominal interest rate (%) Fixe/ Variable Annual interest rate- PGS (%) Effective interest rate (%): Perio Date Loan Other payoffs Annuity Instalment Interest Other expense s Loan balance Cash collateral flows Descrip tion Net cash flow Discounte net cash flow Discounte loan payments Total: Discounte flows of cash collateral Note: Effective interest rate is vali as at the ate of the repayment scheule s preparation. Date: Signature an stamp 14

15 Bank: DEPOSIT REPAYMENT SCHEDULE A ress Phone/Fax: Curre ncy: Deposit amount: Nominal interest rate (%) Fixe/ Variable Premium (%) Effective interest rate (%): Perio Date Deposit amount Payments on behalf of customer Other payments Deposit amount for payoff Interest rate amount Payment s on eposit Other payoffs Deposit balance Description Net cash flow Total: Discounte net cash flow Note: Effective interest rate is vali as at the ate of the payoff scheule s preparation. Date: Signature an stamp 15