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Loan sale law to cover all loans

August 23, 2019 at 9:59am
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One of the most discussed issues during the implementation of Cyprus economic adjustment programme was legislation on the sale of loans which after heated debate and intense consultations was approved by the House of Representatives in 2015.

The law set restrictions and criteria as regards loans with outstanding sums below 1 million euro.

For example, under the law the seller had to notify the borrower of his intention to sell and the borrower had the right to submit a proposal to buy his loan within 45 days.

The Finance Ministry has prepared an amendment to the law so that it covers all loans and not just those  under 1 million euro.

The bill has been sent to the European Central Bank for review which overall was positive.

The amendments propose exceptions in the implementation of the basic law as regards transactions covered by foreign law, the 2018 law on the securitisation of loans and the 1997 law on the transfer of banking operations and collateral.

Moreover, exceptions in place currently will be abolished. These include: if the loan is granted to an individual who is not a permanent resident; if they relate to operations or investments outside Cyprus and if they are guaranteed with property outside Cyprus.

Another proposed change concerns those allowed to sell loans. Currently only those with permission of the Central Bank can do so. The draft bill scraps this requirement saying that buyers can buy credit facilities from anyone.

The bill also sets up a licensing framework by the Central Bank for manager of credit facilities, placing it under its supervision mandate.