Thus the government applies a state guarantee granted in 1992, and will pay OTP Bank Rt. for the bad loans. In a three-year process, OTP will receive compensation for the due capital, interest and other fees. In 2005, the state will pay for bad loans with less than HUF 100,000 in remaining capital. Next year, OTP will be compensated for its non-performing loans ranging from HUF 100,000 to HUF 200,000 in outstanding capital, while in 2007 the remaining loans will be paid by the state.

However, only those debts will be covered by the state whose debtors do not posses other assets besides the property they live in and their total family income does not exceed HUF 37,000 per head a month. Once the state takes over the debt, debtors will receive a ten-year grace period when no further interest is assumed on their debt.

Until Feb. 15, OTP will have to notify debtors, who will have until June 30 to report their compensation request to the local chief of staff of their municipality.
In the first year, the government expects to compensate OTP for 15,000 loans with a total of HUF 1 billion in outstanding capital and about HUF 1 billion in unpaid interests and other fees. Out of the HUF 6 billion allocated for the compensation program, the government plans to spend HUF 1.1 billion on paying for bad loans in 2005.