New NPL regulation in the Czech Republic on the horizon

Czech Republic

The carrying out of business in relation to non-performing loans (NPLs) is currently not regulated in the Czech Republic. This is going to change as the Czech Ministry of Finance introduced a new draft law on the market for non-performing loans. A number of market players will be affected. It will be therefore important to adapt the local NPL business to the new requirements.

Who will be affected?

Although the new law will affect mainly purchasers and credit servicers of such NPLs, it introduces also new duties for certain NPL sellers, such as banks.

New obligations for NPL servicers

Unless the NPL servicer is a bank or a licensed consumer credit provider, each NPL servicer will need to get a specific NPL servicing license from the CNB or its home member state authority. The NPL servicer will need to maintain an appropriate system of internal management related to internal controls, AML issues, and dealing with debtors, including a complaints management system. The CNB license will give the servicer the right to service NPLs also in other member state following a simple passporting procedure.

The law will increase the protection of creditors with respect to the funds collected by the servicers on their behalf and increase mandatory duties of servicers under a service contract. Servicers will also need to follow new rules on dealing with debtors, in particular information duties and fair dealing.

If the bill is passed, NPL servicers currently operating in the Czech Republic under a general trade license may continue to do so, but they will need to apply for the new license by 29 July 2024.

New obligations for NPL purchasers

A NPL purchaser will need to engage a NPL licensed servicer for the servicing of its consumer related NPLs, unless the NPL purchaser is a licensed servicer.  The NPL servicer will carry out majority of purchaser’s obligations vis-à-vis its debtors.

Furthermore, the NPL purchaser will need to notify the CNB of the servicing the NPLs and the identity of the relevant servicer no later than on the day such servicing has started.

New obligations for certain NPL sellers

When offering NPLs for the sale, banks and credit unions need to provide sufficient level of information to the NPL purchasers in a specific form and content.

The sale of NPLs will need to be reported to the CNB on bi-annual basis by the sellers, or by the NPL servicers on their behalf.


Breaching the law, such as carrying out NPL services without a license may lead to a fine of up to CZK 5 million. CNB will supervise the compliance with the law.


The law is proposed to become effective from 30 December 2023. Since the law has not been enacted yet and a number of institutions have raised comments, we recommend following the adoption process and potential further changes over the next few months.

Feel free to contact us for more information about the law and impacts it may have on your NPL business in the Czech Republic.