Speaking at yesterday’s meeting of the Verkhovna Rada of Ukraine Committee on Financial Policy and Banking, at which Draft Bill No.3111 On Amendments to Some Laws and Regulations concerning the establishment and maintenance of the Credit Registry of the National Bank of Ukraine was discussed, Deputy Governor of the National Bank of Ukraine Vladyslav Rashkovan underlined that the Credit Registry of the National Bank is established solely for the purpose of banking supervision.

Ukraine has committed to establishing a Credit Registry under the Memorandum of Economic and Financial Policies entered into between the IMF and Ukraine under the Extended Fund Facility Arrangement.  In addition, Draft Law No.3111 does not provide for the liquidation of private credit reference agencies operating in Ukraine. On the contrary, this draft law is intended to put in place an important component of the information sharing framework, which is required for lending.

During the meeting, Vladyslav Rashkovan siad that this practice is common in at least 14 euro area countries, where the synergy is achieved thanks to information sharing between the public credit registries and private credit bureaus. "These countries include Austria, Bulgaria, Czech Republic, Romania, Portugal and others. Establishment of public credit registries, their interaction with private credit bureaus and the way they are operated are subject to legal regulation in these countries, which proves   beneficial for the market development and banking supervision. In addition, public credit registries across euro area countries maintain close cooperation with each other, sharing information on large corporate debtors.

He added that the NBU’s Credit Registry, which is established solely for the purpose of banking supervision, is not going to compete with private credit history bureaus.  Such information will enable the early identification and prevention of risk concentration among problem borrowers in the banking sector.  

The banking community also pushes for the enactment of the bill into a law. Executive Director of the Independent Association of Banks of Ukraine Olena Korobkova voiced a consolidated position of banks that the future law would contribute to reducing related-party lending, which is crucial for the sustainable development of the banking system.  “The possibility to obtain information from the NBU’s Credit Registry is yet another way to mitigate risks arising from asset-side transactions.  In any case, this does not mean that credit history bureaus will be replaced by the Credit Registry, as they have their own mission and wider functions than those performed by the Credit Registry,” commented Olena Korobkova.

Following the establishment of the Credit Registry, Draft Law No.3111 will entitle the National Bank of Ukraine to exercise the following functions:  

• receive information from banks and provide them with information on a legal entity or an individual without the consent thereof;
• use information derived from the Credit Registry to perform banking regulation and supervision functions, including the consolidated supervision and risk management in banks.

At the same time, Draft Law No.3111 obliges banks to do the following: 

• submit information to be entered into the Credit Registry (this requirement shall also apply to banks that have been declared insolvent and banks under liquidation);
• notify a client that information thereon shall be submitted to the Credit Registry.

Banks shall have the right to use information derived from the Credit registry to reduce risks arising lending transactions.

Once the Draft Law is finalized, it will be tabled to the Verkhovna Rada of Ukraine for consideration.