BUSINESS

Interest in business loans may be shaved

By Dimitra Manifava and Evgenia Tzortzi

A crucial package of interventions on the burning issue of nonperforming loans to enterprises and households is expected to be presented in the first half of September as details are hammered out over the summer.

The government, its international creditors and banks are examining the introduction of out-of-court settlements for corporate debts through a-la-carte arrangements that will include writing off interest in the first phase, changing the procedure before and on default, as well as amending the law providing protection from bankruptcy.

Even the Code of Conduct regarding the management of bad loans is being rewritten in order to ensure greater speed and flexibility.

As for the anticipated “haircut” on corporate loans, sources say the proposal currently being discusses provides for the initial write-off of interest on the loans of certain corporations, which will be chosen according to sustainability criteria. In the long run, possibly after five years and provided that after the interest write-off a corporation is consistent in its loan repayments, a reduction of the original loan capital may be examined.

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