Lawmakers on Monday made more progress on a government bill aimed at reducing the stock of non-performing loans on banks’ books – a pledge Cyprus made to the EU in exchange for funds from the Recovery and Resilience Facility.

Another discussion will take place next week, after which deputies hope to take the bill to the plenum for a vote. The government tabled the bill several months ago.

By the end of 2021, the island was supposed to have enacted a set of reforms across various areas which, once approved by the European Commission, would lead to the release of the first tranche (€85 million) from the Recovery and Resilience Facility. But that deadline was pushed back to February, and now in July the government has yet to fulfill all its commitments to Brussels.

The last hurdle remains the legislation relating to reducing NPLs. The sticking point relates to a provision in the government bill, allowing debt administrators access to the financial data of collateral providers and loan guarantors.

Opposition parties wanted the clause stricken from the bill, arguing that since debt administrators do not own a loan, they should not have access to this data. In particular, such companies would have access to the ‘Artemis’ credit database and to the records of the Department of Lands and Surveys.

Following Monday’s session of the House finance committee, it appears these concerns have largely been assuaged. Safeguards have been inserted so that debt administrators or credit-acquiring companies (CACs) will not have access to the wealth information of debt guarantors or collateral providers.

In addition, the bill now provides for penalties on these companies for unauthorised access to this information.

But during the discussion, other matters came up. One related to the apparently low start-up capital requirement for debt administrators and CACs. Deputies said for example that a company with just €150,000 in start-up capital manages assets worth hundreds of millions. And they asked what would happen if such a company went bankrupt.

According to Greens deputy Stavros Papadouris, a 2018 law spells out that borrowers with mortgages have the right to compensation if a court finds that a bank or CAC acted in bad faith.

“It’s a question that will be posed when borrowers win such cases in the courts, once the matter of compensation comes up, when there is no money to give for compensation…you’ll just have a piece of paper which you’ll frame on the wall.”