The National Bank of Ukraine (NBU) has streamlined letter of credit operations’ procedure for banks.

The respective novelties were provided in NBU Board Resolution No. 38 On Amendments to Some Regulatory Documents of the National Bank of Ukraine dated 11 April 2018 (hereinafter referred to as the “Resolution”).

This instrument was designed as part of the cooperation between the NBU, the Independent Association of the Banks of Ukraine, the International Chamber of Commerce for the Paperless Project for the purpose of maximum possible replacement of paper documents for banks’ customer servicing.

The novelties introduced by the Resolution:

• streamlining procedures for letter of credit operations in domestic currency (operations are transacted in compliance with the UCP 600 international rules);
• streamlining letter of credit servicing (reducing the number of formal regulations for executing letter of credit operations);
• enabling banks and all their customers to use electronic documents during all the stages of letter of credit operations.

The purpose of the Resolution is:

• to harmonize the procedure for letter of credit operations in domestic and foreign currencies with up-to-date international practices for said operations;
• to introduce electronic work flow during all stages of letter of credit operations;
• to decrease the number of paper documents used by banks and their customers for letter of credit operations;
• to outline the procedure for letter of credit operations in domestic and foreign currencies by a uniform NBU regulation.

The Resolution will amend the following documents:

The Regulation On the Procedure for Transacting Documentary Letter of Credit Operations in Domestic Currency by Authorized Banks approved by NBU Board Resolution No. 514 dated 3 December 2003 (detailing general rules for documentary letter of credit operations in foreign currency for banks);

The Instruction on Cashless Domestic Settlements approved by NBU Resolution No. 22 dated 21 January 2004 (specifically, to Chapter 8: Letter of Credit Settlements prescribing general rules for letter of credit operations in domestic currency transacted by banks).

The Resolution enters into effect on 20 April 2018.