"A decree-law was approved that aims to protect families with loans in bank default, benefiting from additional protection under the Action Plan for Default Risk (PARI) and under the Out of Court Procedure for Settlement of Default Situations (PERSI)," said the statement issued at the end of the Council of Ministers meeting.

Thus, by 31 August, financial institutions "should assess the financial capacity of their customers," and by 15 September, if legal requirements are met, "they should present proposals to improve their contractual conditions," it states.

The Government explains that in the event of financial difficulties, families with home loans are protected for a minimum period of 90 days, "and financial institutions cannot terminate the contract or take legal action".

Financial institutions are also not allowed to increase the interest rate of credit contracts, even if they are not covered by a moratorium, under agreements concluded in the context of PARI and PERSI, thus reinforcing the protection of bank customers.

The executive aims to ensure that "institutions monitor their customers more proactively and that the Bank of Portugal has the tools to supervise these steps".

Most of the moratoria were due to end in September, and there is concern about how families and companies will react to the obligation to repay loans in a very difficult economic situation.