It will allow the owners to continue to live in the house by paying lower rent instead of a prohibitively high instalment, the minister said in an interview with the Cyprus News Agency.

“In some cases there will not be a scheme with taxpayer money that will support cases that do not fulfil the strict social and income criteria that will be set,” Georgiades said.

Georgiades said the return to growth amid the ongoing credit crunch was linked to restoring the banks’ capability to lend. That in turn was connected with the issue of the crippling non-performing loans (NPLs), which had to be dealt with.

“This handling and management cannot be general, generalised, and sweeping,” he said. “It should maintain different handling for different cases.”

NPLs have reached 50% of total loans – at €22bn, or 135% of GDP. The International Monetary Fund urged Cypriot legislators to put in place a “strong legal framework to facilitate foreclosures.”

Georgiades said non-viable loans and uncooperative borrowers could be dealt with by an asset management company, like in other countries with the same problem.

“It should be in the banks’ options,” the minister said. He said this was not a matter that must be decided at a political level. “It is mainly, and it should be, a decision based on the banks’ operational plans and not something that will be decided by political decisions, political interventions, or much worse, third party interventions, possibly by those affected trying to secure there interest on the back of the public interest,” Georgiades said.

The minister acknowledged that banks’ capability to collect debt had been limited and that laws should be enacted to bolster their potential. Procedures against uncooperative borrowers could have taken 15-20 years, the minister said. “This was certainly a serious drawback, which must be corrected,” he said.

Source: Cyprus Mail