The Greek Ministry of National Economy and Finance is introducing a legislative provision aimed at easing the burden on thousands of borrowers with active debt arrangements under Law 3869/2010, widely known as the Katseli Law.
The measure seeks to ensure the full and uniform implementation of a recent decision by Greece’s Supreme Court, the Areios Pagos, clarifying how repayments should be calculated and reducing additional financial pressure that affected many households.
According to the ministry, the new framework will lead to a measurable reduction in monthly payments by eliminating a calculation practice that had increased costs for borrowers over the years.
The regulation also provides for the retroactive recognition of excess amounts already paid by borrowers who have consistently followed their repayment plans. These payments will be treated as already repaid capital, reducing the remaining debt balance and the number of installments required until full repayment.
The government said the measure offers additional protection to borrowers who continued meeting their obligations despite financial difficulties, while also balancing the interests of banks and the state-backed “Hercules” guarantee program, depending on the amounts received by each side.
What changes for borrowers
The new regulation is expected to provide four key benefits:
- The Supreme Court decision will be applied universally, meaning borrowers will not need to return to court to seek individual solutions.
- The cost of repayment will decrease, as interest will be calculated only on the monthly installment rather than on the entire outstanding capital.
- Previous excess payments by eligible borrowers will be recognized and offset against their debt.
- The financial burden will be fairly distributed between banks and the Hercules guarantee program.
In practice, borrowers are expected to benefit from lower monthly installments, reduced total repayment costs and faster completion of their loans.
Example of how payments change
The ministry provided an example showing the impact of the new calculation method.
A borrower with an outstanding debt of €144,500 in January 2024 would previously have paid a monthly installment of €731 for 300 months under the previous calculation method.
With the new method, the monthly payment would fall to €483, consisting mainly of capital repayment and only €1 in interest.
If the borrower had continued paying the previous €731 installment from January 2024 until June 2026, the additional amount paid during that period would be recognized and deducted from the remaining repayment period.
As a result, instead of having 270 installments left, the borrower would repay the loan through 255 installments of €483, with a final installment of €266.
The ministry estimates that total interest payments in this example would fall from €74,852 to approximately €411.
Why the government introduced the change
The legislative intervention follows the Supreme Court decision but aims to resolve uncertainties that emerged regarding its practical application.
The ministry said the court ruling provided the main direction, but different interpretations remained over how interest should be calculated and whether previously paid excess amounts should be recognized retroactively.
The new legislation is intended to clarify the rules, create a single system for all eligible borrowers and turn the decision into an immediately applicable right without the need for further legal action.
What happens with other debt arrangements
The regulation also clarifies that arrangements made through Greece’s out-of-court debt settlement mechanism and other existing frameworks, including Law 4605/2019, will continue to follow their current rules.
For these cases, monthly payments will continue to be calculated as amortizing loan payments based on the total regulated debt amount, as already provided by the existing legal framework and agreements.
Impact on the Hercules guarantee program
The reduction in borrower payments is expected to lead to lower future collections for the state-backed Hercules program.
The estimated impact is around:
- €500 million over 20 years due to lower payments on loans totaling €16.5 billion.
- An additional €200 million from the retroactive application of the measure.
However, the ministry noted that a significant part of the retroactive cost will not fall on the state, as it will be covered by financial institutions.
