The Knesset recently approved Amendment No. 5 to the Regulation
of Nonbank Loans Law, which is now called the Fair Lending Law.
This comes after years of deliberations and in the long wake of
recommendations submitted in 2013 to increase competition in the
banking system.
The importance of this amendment is two-pronged. On the one
hand, the amendment expands the application of the law to also
encompass institutional lenders, including banking corporations
that, up until now, had been excluded from its application. On the
other hand, it also prescribes a maximum interest on loans that is
more in tune with the Israeli economy, and it imposes a list of
sanctions against both those who violate the disclosure obligations
by virtue of the law and those who charge interest rates that
exceed the permitted maximum. This is another important component
of the efforts to institutionalize the nonbank credit market and to
differentiate it from the illegitimate "grey market."
