NPL Directive
From Open Risk Manual
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Definition
NPL Directive is the informal name of DIRECTIVE (EU) 2021/2167 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 24 November 2021 on credit servicers and credit purchasers and amending Directives 2008/48/EC and 2014/17/EU.[1]
Motivation
The Directive should enable credit institutions to better deal with loans that become non-performing by improving conditions for the sale of the credit to third parties. Moreover, when credit institutions face a large build-up of NPLs and lack the staff or expertise to properly service them, they should be able either to outsource the servicing of those loans to a specialised Credit Servicer or to transfer the Credit Agreement to a Credit Purchaser that has the necessary Risk Appetite and expertise to manage it.
