Legislative regulation for Katseli Law debtors tabled in Parliament

Pursuant to the decision of the Plenary Session of the Hellenic Supreme Court issued in February, it is recalled that interest on loans governed by Law 3869/2010 (the “Katseli Law”) must be calculated on the monthly instalment set by the court, rather than on the total outstanding debt balance.

Following the Supreme Court ruling, this legislative initiative is expected to accelerate the alignment of non-performing loan (NPL) servicers with the lawful calculation of instalments for households that were included in the protection framework of Law 3869/2010 and whose arrangements remain active. At the same time, the provision introduces the retroactive recognition of any excess amounts already paid by consistent borrowers under active arrangements. These amounts are recognised as already repaid principal, thereby reducing the outstanding debt balance and, correspondingly, the number of remaining instalments until full repayment.

It is worth noting that, for two categories of borrowers, no error is recognised after payment. In the relevant announcement, the Ministry of Finance states: “Any amounts paid for arrangements that have been completed or for which the conditions for default have been met are not subject to retroactive recovery.”

It is further clarified that, for cases that have been closed or declared in default, either the debt has been fully repaid and the primary residence has already been safeguarded (usually through a lump-sum repayment of the remaining principal), or legal effects have already taken place for both parties due to non-payment over a period of months or years. As a result, thousands of households classified as “over-indebted” under court decisions within the framework of Law 3869/2010 have either:

• either preserved their primary residence by paying amounts that, in practice, were calculated under standard contractual banking terms rather than under the favourable terms set by the court, or
• lost their protection and collateral due to inability to meet instalments that are now considered incorrectly calculated, simply because prevailing market conditions in recent years were conducive to potentially abusive practices.

This highlights a difficult balance. On the one hand, a comprehensive retroactive reassessment of all cases would create significant legal and systemic uncertainty. On the other hand, the discussion remains open regarding past market practices and whether these are consistent with the principles of financial ethics.

Elimination of potential recourse for settlements under the Out-of-Court Debt Settlement Mechanism

In addition, the regulation effectively eliminates any possibility of future recourse, in the interest of equal treatment of those who have entered into settlements through the Out-of-Court Debt Settlement Mechanism. As noted in the relevant announcement of the Ministry of Finance, the monthly instalment under the mechanism is calculated as an amortising instalment (principal and interest) on the total restructured debt amount, and not on the monthly instalment basis as already provided for under the law, regulatory acts, and settlement agreements.

Loans under Law 3869/2010 amounting to €16.5 billion under the “HERCULES” scheme

Within the framework of the “Hercules” Asset Protection Scheme (HAPS), non-performing loans (NPLs) totalling €40.7 billion had been securitised as of December 2024, with the corresponding state guarantees ranging between €15.7 billion and €17.9 billion as of early 2025, thereby contributing to the stability and soundness of banks’ balance sheets.

The Ministry of Finance currently estimates that the total impact on future recoveries under the “Hercules” guarantee programme will amount to approximately:

• €500 million over a 20-year horizon, due to lower instalments on loans totalling €16.5 billion, plus
• approximately €200 million from the retroactive application of the regulation

The financial burden will be shared between the Greek State and the banks, depending on the amounts already collected by each party, with a critical reference point being the transfer of the loans into the “Hercules” securitisation schemes.