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Loan variations and responsible lending

If a variation to a loan contract is documented by a new credit contract instead of a variation agreement, the responsible lending provisions will be triggered.

Everybody knows that the responsible lending obligations are triggered when a loan is varied by increasing the principal sum, but it may come as a surprise that other loan variations can also trigger responsible lending obligations.

The responsible lending obligations (making enquiries about the borrower’s requirements and objectives, enquiring about and verifying the borrower’s financial position and making a credit assessment) are triggered when a credit assistant suggests or arranges for a borrower to enter into a specific credit contract or specific finance lease.  More…