Greece’s Ministry of National Economy and Finance is finalizing a legislative amendment to slash monthly repayments and shorten loan terms for thousands of distressed borrowers protected under the nation's "Katseli Law" debt framework.
The upcoming legislation uniformly applies a recent Supreme Court ruling, bypassing the need for borrowers to secure individual court orders.
The new framework corrects a systemic error where interest was erroneously calculated on a loan's full outstanding capital rather than solely on the monthly installment.
Under the correction, monthly liabilities will fall sharply, and past excess amounts paid by compliant households through June 2026 will be directly credited toward reducing their remaining principal balances.
Ministry data illustrates that a typical borrower with a €144,500 debt balance will see monthly obligations drop from €731 to €483, with total lifetime interest costs collapsing from nearly €75,000 to just €411.
For those who overpaid during the last two years, the credited capital will automatically eliminate 15 remaining installments.
The measure carries a significant financial impact, estimated to reduce collections by €700 million over 20 years.
This includes a €500 million reduction in future revenue and €200 million from retroactive overpayment credits.
Government officials confirmed that the state will shield its "Hercules" bad-loan guarantee scheme, forcing commercial banks and financial institutions to absorb the bulk of the retroactive costs.
Alternative out-of-court settlements and Law 4605/2019 remain entirely unaffected by the new interest calculation.