The main aim of the said Bill is for banks to absolve themselves of distressed loans and seeks toensure that rights of borrowers and mortgage holders of distressed loans will be transferred to new investors. The Bill makes a clear distinction between loans under €1 million which represent 96% of loans in the banking system of Cyprus and those with amounts of over €1 million.

The cornerstones of the Bill are the following:

(i)                 Loans of up to €1 million will be subject to strict regulations namely that those buying the loans must be resident in Cyprus, or subsidiaries of credit institutions in other EU member states. 

(ii)               Non-credit institutions, such as debt-buying firms, may also qualify to buy loans as long as they are handpicked by the state and obtain a license by the Central Bank.

(iii)             Loans exceeding €1 million will be subject to the criteria whether borrower rights will transfer over to the new loan.