Bank of Italy says draft law could cut credit recovery process to 7-8 months

ROME: The Bank of Italy has calculated that a draft law allowing creditors to recover bad debts without involving the court system could drastically reduce the length of time the process requires, a source familiar with the matter said.

Italian banks are groaning under 360 billion euros ($407.5 billion) in bad loans, which take years to shift partly due to a slow and inefficient justice system. Prime Minister Matteo Renzi's cabinet is due to meet on Friday to discuss a draft law aimed at making credit recovery more efficient, according to a government source.

Another source said the decree will include an option to bypass the law courts.

The Bank of Italy produced a study which said having the option to avoid involving the courts could cut the process to 7-8 months from three and a half years, the first source said.