The Finance Ministry submitted on Friday to the Parliament the bill on loans sales after its approval on Wednesday by the Cabinet.
Based on the updated Memorandum of Understanding, the bill should be voted into law by the end of September 2015.
The purpose of the bill, as described by the Ministry, is to secure the authorization of Central Bank of Cyprus to regulate and supervise the sale of loans in order to ensure the proper functioning of the sale, the management of loans and the safeguarding of financial stability in the Republic.
It is expected that the bill will bring benefits for both the credit institutions and the economy in general, as it will allow further deleveraging of balance sheets and improve the capital position and liquidity of credit institutions. This will facilitate the provision of new loans, which will further boost liquidity and economic activity.
All the rights of natural and legal persons whose loans will be sold are fully guaranteed in all cases, regardless of the size of the loan.
The bill provides that loans of individuals or small and micro enterprises under € 1 million may be redeemed only by credit acquisition companies in the Republic of Cyprus, authorised by the Central Bank, licensed credit institution, credit institution that has been authorized and supervised by a competent authority of another Member State that are entitled to provide services or establish a branch in the Republic, financial institutions which are subsidiaries of a credit institution established in a Member State and which provide services in the Republic or carries on business in the Republic through a branch.
According to statistics provided by the Central Bank, 96% of loans in Cyprus do not exceed €1 million.
The bill also includes provisions relating to the supervisory and administrative powers of the CBC as well as the penalties for violation or failure to comply with the law.
ENDS, CYPRUS NEWS AGENCY