Tougher loan repayment reports denied

The Ministry of Development and Competitiveness has denied reports that it plans to toughen up existing legislation commonly referred to as the Katseli law which offers protection to households overburdened by debt.

A list of suggested revisions to the law include increasing minimum monthly loan installments from 10 percent of the original monthly amount to 25 percent. Another proposed revision entails repayment of the entire value of the property – based on the tax department’s so-called objective values – instead of the 80 percent provided for by the law, should debt holders wish to protect their primary residence from liquidation procedures. This revision would increase the payments of debt holders to banks and has been proposed in a bid to stop certain debtors from exploiting the favorable terms offered by the law.

The proposed revisions also include allowing small-scale traders to qualify for protection from excessive debt.

The ministry’s finalized draft bill on new regulations concerning nonperforming loans, which the government is working on in association with commercial banks, is expected to be tabled in Parliament next month.