The issue of Non-Performing Loans (NPLs) cannot be resolved solely by protective measures for vulnerable individuals, since these measures are too narrow in scope, the Cyprus Borrowers Association (Syprodat) said this week in response to an interview by president Nikos Christodoulides to local outlet InBusiness.
Furthermore, Syprodat asserted that the creation of a “Special Court” for the speedy resolution of disputes between borrowers and creditors is blatantly unconstitutional.
“It should be noted that there was no mention during the president’s interview on the establishment of a Financial Ombudsman, which could have potentially helped address the aforementioned issues”, the association noted.
As the Cyprus Parliament commences its sessions, Syprodat emphasised the importance of a constructive dialogue between the Legislative and Executive branches to find the right balance for the permanent resolution of NPLs.
The association believes that this balance can be achieved through the implementation of the Central Bank of Cyprus’ ongoing initiative.
Additionally, Syprodat welcomed the government’s initiatives, such as the Estia and Ikia programmes and the “Rent for Installment” scheme, stating that these programmes will genuinely assist vulnerable segments of the population.
Regarding the matter of foreclosures, the association agreed with the president’s stance that measures should not be taken to undermine the culture of payments, hinder banks’ efforts to reduce NPLs or discourage borrowers from participating in debt restructuring.
However, Syprodat explained that the proposed law amendment, which was rejected by the Parliament due to a tie vote, did not weaken or affect the existing foreclosure framework, as suggested by the president.
Instead, the association continued, it “merely granted borrowers the right to seek effective judicial protection if there were over-indebtedness in their loans or abusive clauses in their loan agreements”.
“Banks could have easily avoided this legal process by formally removing all over-indebtedness and abusive clauses from the contracts,” the association added.
Syprodat also asserted that the current legal framework for foreclosures remains unaffected.
In the aforementioned interview with InBusiness, President Christodoulides emphasised the need to avoid measures that undermine the payment culture, impede banks’ efforts to reduce NPLs, and discourage borrowers from participating in debt restructuring.
In addition, he highlighted that avoiding such measures is crucial for Cyprus’ credibility and warned of potential negative consequences associated with adopting measures that could weaken the foreclosure framework.
The president also discussed the government’s intention to submit a bill to parliament for regulating the place of adjudication, within the jurisdiction of District Courts, for disputes between borrowers and creditors related to credit facilities secured by the primary residence up to €350,000.
Finally, he also expressed the government’s intention to work constructively with the legislative authority to establish an appropriate framework based on the Government’s proposals.
