On 19 October 2011, the Presidentof the Russian Federation signed the federal law that allows individuals to make early repayment on loans (the "Law").
The Law stipulates that:
- a creditor has the right to receive from a borrower interest accrued up to the day of full or partial repayment of the loan in the event of early repayment of the loan;
- a loan given to an individual borrower for non-commercial use may be repaid early in full or partially if the creditor is notified at least 30 days prior to the repayment. The agreement may stipulate a shorter period for notifying the lender; and
- the provisions of the Law apply to a loan agreement concluded prior to the day of its coming into force, i.e. retroactively.
The Law is intended to provide additional protection for borrowers' rights, as borrowers are typically the weaker party in legal relations. The Law comes into force on 1 November 2011.
[Federal Law No. 284-FZ "On Amending Articles 809 and 810, Part Two of the Civil Code of the Russian Federation", dated 19 October 2011]