The lex specialis Law on Conversion of Housing Loans Indexed in Swiss Francs submitted to the National Assembly

The Government of the Republic of Serbia on 16 April 2019 by urgent procedure adopted a draft of the Law on Conversion of Housing Loans Indexed in Swiss Francs („Law”). The Law is on the agenda of the Fourth Sitting of the First Regular Session of the National Assembly which started on the 18 April 2019, it is expected to be adopted by an urgent procedure.

The Law will regulate the rights and obligations of banks and natural persons with whom the bank concluded a housing loans contracts with a currency clause indexed to Swiss Francs and the process of debt conversion based on this loan in the debt indexed in Euros.

According to the provisions of the Law banks, in which users are repaying the housing loans, are obliged to offer a conversion of the remaining debt under the loan indexed to Swiss Francs into a debt indexed to EURO at the conversion rate. The remaining debt will then be reduced by 38 %.  According to the provisions of the Law for the interest calculations banks will be obliged to draw up a new loan repayment plan. After the Law enters into force all disputes related to the currency clause in the loan agreements defined by the Law will be terminated. All procedures of enforced satisfactions of claims will also be terminated unless the consumers notify the bank about not accepting the conversion of the loan, and does not conclude a loan conversion contract. Within 30 days from the date of the Law’s entering into force banks will be obliged to deliver the proposal of the conversion contracts to the users, while the users will have a 30 days’ deadline to accept the same proposal. All the costs of the loans conversion are borne by the bank, while the users cannot bear any additional costs that arise through the conversion of the loans.

The main objective of the Law is to solve the problem created for the loan consumers, who wanted to meet their basic needs of housing, due to the continuous strengthening of Swiss Francs. As the problem could not be solved only by the Government’s decisions, it was necessary to pass a law that would solve this issue in a comprehensive manner. By adopting the Law, the loan consumers, which were found in a difficult economic situation with the risk of remaining without their assets because they are not able to repay the loan, will be in a much better position.