Greece's parliament has passed a law that tightens oversight of NPL servicers, sets a fixed 3% rate under the out-of-court debt mechanism and raises the maximum fine to 5 million euros.
Lawmakers in Greece on Thursday approved legislation tightening supervision of companies that manage non-performing loans (servicers), according to To Vima — Finance. The bill, submitted by the economy and finance ministry, passed in principle with the votes of the ruling New Democracy party, while opposition parties voted against. Several individual provisions received broader support: the articles gathered between 158 and 227 votes in favor, and a government amendment was backed by 212 MPs, with 49 against and 27 abstentions. The amendment fixes the interest rate at 3% for the whole repayment period for eligible borrowers whose debts are restructured through the out-of-court mechanism. Previously, 3% applied for the first three years on secured debts and 4% on unsecured ones, after which the rate became variable. The amendment also raises the maximum administrative fine the Bank of Greece can impose on servicers from 500,000 to 5 million euros. The law introduces annual management audits and wider disclosure duties for servicers, and designates the Bank of Greece as the supervisory authority. Borrowers are entitled to detailed information on their obligations, and interest accrual can be suspended if the required documentation is not supplied on time. A ceiling on interest accruing on outstanding claims is also set. Creditors face restrictions on starting enforcement against borrowers who keep to their repayment arrangements, and a standardized restructuring proposal must be submitted at least three months before a scheduled property auction. The bilateral negotiation framework must be completed within six months, with any required down payment capped at 15% of the outstanding debt. The bill also allows overdue tax and social security debts to be repaid in up to 120 monthly installments, subject to eligibility requirements. A controversial Article 23 was withdrawn by the government after opposition criticism and was not adopted. This article is a factual summary of the reported changes and not legal or financial advice.