Introduction of the in duplum rule in Rwanda
In duplum directly translates to “double the amount”, but in law the in duplum rule provides that arrear interest ceases to accrue once the sum of the unpaid (accrued) interest equals the amount of capital outstanding at the time (and not the amount of capital originally advanced). To illustrate the in duplum rule, if someone borrows RWF5-million and had already repaid RWF3-million, under the in duplum rule, the cap of interest to be paid at the time of recovery is RWF2-million ie, the borrower’s total obligations cannot be more than RWF4-million.
The New Banking Act also sends a strong message to lenders who delay in recovering non-performing loans by enforcing their security and end up recovering more than twice the outstanding principal from borrowers.
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