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FinMin says scheme for responsible borrowers is not feasible

September 10, 2019 at 7:55am
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Finance Minister, Harris Georgiades, said on Monday that a new scheme for responsible borrowers does not appear to secure the approval of the European Commission.

The Ministry has conducted deliberations with the Commission but it does not seem to be particularly feasible or right and there was a negative indication by the Commission regarding a scheme for borrowers that can repay their loans, Georgiades told the House Committee on Financial and Budgetary Affairs.

These schemes are implemented with the taxpayers’ money, said Georgiades, and the state believes that if there are any resources these should be made available to individuals who are not covered by the “Estia” scheme, adding that the state already implements loan installment or rent subsidy schemes.

He said, moreover, that the interest rate paid by borrowers has declined significantly through the gradual consolidation of the banking sector.

The Minister stressed that borrowers who are not considered viable and therefore eligible for the “Estia” scheme should also submit an application that in turn would be classified by the government under a separate category to be further examined.

Those applications, he said, will be considered pending and the banks will not be able to take measures to put the residence up for auction.

For further measures to be taken, he noted, the borrowers must submit their applications along with all supporting documents. Unless these applications are received, he said, a plan cannot be drawn up.

Georgiades said that a scheme identical to the “Estia” is being prepared for borrowers of the House Financing Organisation who have built a house in state land while a special scheme for loans at the Central Agency for Equal Distribution of Burdens is ready.

Governor of the Central Bank of Cyprus, Constantinos Herodotou, said that the Central Bank has been working on a mechanism regarding auctions whereby people who feel that they are treated unfairly can submit their complaint.

He said that first they will hold consultations with the Single Supervisory Mechanism in order to secure the approval of the European Central Bank. This mechanism, he added, will examine the way different cases are dealt with at court, but it will not give strategic defaulters excuses.

(Cyprus News Agency)