Red Loans: How Interest Will Be Calculated for 350,000 Katseli Law Borrowers

Alarm bells are ringing ahead of the Supreme Court’s (Areios Pagos) upcoming ruling that will definitively determine how interest is calculated on restructured debts under Greece’s Katseli Law — affecting approximately 350,000 borrowers with non-performing loans. The decision, expected at tomorrow’s Plenary Session, will clarify whether interest accrues on the full outstanding loan balance or only on the monthly installment. According to reports, Justice Sotiris Plastiras, the case’s rapporteur and Deputy President of the Areios Pagos, is expected to side with borrowers — recommending interest be calculated solely on the monthly payment, not the total debt. This interpretation aligns with Article 9(2) of Law 3869/2010, which states monthly payments are ‘interest-bearing, without compound interest.’ Creditors — including banks and loan servicers — argue interest should apply to the entire restructured principal, while borrowers maintain the law’s protective intent supports calculation only on the monthly installment. The difference is substantial: applying interest to the full €100,000 loan at 4.5% yields €4,500 annually, versus just €270 if applied only to a €500 monthly payment. While international practice typically applies interest to the full capital, Greek courts have previously emphasized debtor relief as central to the Katseli Law. Last year, the Prosecutor of the Areios Pagos, Georgia Adeilini, supported borrowers’ interpretation. A final ruling is now imminent.