The National Bank of Ukraine has streamlined the rules for obtaining loans denominated in foreign currency by residents from non-residents. NBU Board Resolution No. 996, dated 30 December 2015 On Amendments to Some NBU Regulations has been issued to this effect.
The amendments concern mainly the registration procedure for these agreements. Resolution No. 996 has repealed the anti-crisis provision currently in effect prohibiting the NBU from registering two types of changes to such agreements. First, if these changes involve the replacement of a creditor and/ or a debtor in an obligation under such loan agreements. Second, prohibition of registration also applies to the loan agreements denominated in foreign currency in case of assignment of the right of claim under this agreement by the resident lender to the non-resident.
At the same time, to offset potential negative effects of the lifting of the prohibition on registration of such agreements, the regulator has put in place preemptive measures aimed at preventing authorized banks' clients from performing risky activities.
Henceforth, banks shall perform additional verification of a client and documents submitted by the client for registration of an agreement in order to identify characteristics of financial transactions that might lead an authorized bank to perform risky activities that pose a threat to the interests of depositors or other bank’s creditors. Based on the findings of inspection of documents and information, a servicing bank shall issue an opinion on whether or not such financial transactions fit the description of risky transactions. If an opinion confirms that such financial transactions fit the description of risky transactions, an authorized bank should reject the execution of transactions under such an agreement and reject sending to the NBU documents required for registration of an agreement.
The resolution has also extended the registration timeline from 5 to 7 business days. At the same time, in cases specified by this resolution, the NBU should perform additional verification of documents submitted by the bank for registration of agreements entered into by clients. The list of such cases and additional documents that are required in such cases are set out in Resolution No. 996. The duration of an inspection may not exceed 30 calendar days and shall not be included in the duration of the registration procedure.
Thus, under streamlined rules, the full responsibility for verification of clients’ documents and identification of characteristics that fit the description of risky activities rests with a servicing bank. The move also reduces the exposure of the economy to risks of capital outflows abroad.
The aforementioned amendments to the rules take effect from 11 December 2016.