From July 24, 2014, the National Bank of Ukraine has introduced the emergency regime of operation for the banking system in Luhansk, Donetsk oblasts and the Autonomous Republic of Crimea.
The move has been prompted by the situation which makes it impossible for the banking system to operate normally. It is intended to provide financing to meet the needs of the economy and maintain vital services to the public.
Special rules and procedures governing the operation of the banking system under the emergency regime are set out in Resolution of the National Bank of Ukraine Board No 435, dated July 22, 2014 (hereinafter – the Instruction).
The Instruction sets out the rules on performing banking operations, description of changes in operational procedures, covers some aspects related to the operation of the National Bank of Ukraine and Ukrainian banks, determines the powers to make decisions in relation to the execution of these operations in the event of an emergency situation which makes it impossible for the banking system to operate normally (hereinafter – the emergency regime of operation). The emergency regime of operation may be imposed during a period when counter-terrorism operations are conducted and in the event of a natural or man-made disaster, etc.
The banks’ activities are strictly regulated, the conduct of banking transactions requires adherence to a large number of procedures. However, in an emergency situation that poses a threat to life, health of employees, property of Ukrainian banks and the National Bank of Ukraine and requires prompt response and swift action, this Instruction allows banks to follow simplified procedures in some areas.
At the same time, the Instruction provides for greater responsibility for the decisions made and control mechanisms put in place to oversee their implementation.
The Instruction sets out the special procedure for the suspension of participant’s operation in the system of electronic payments run by the National Bank of Ukraine (the SEP) and the resumption of participant’s operation after this temporary suspension, as well as the special procedure of the execution of payment orders by the bank if the bank has been cut off from the SEP or in the event of malfunction of the bank automated system.
The Instruction establishes the cash handling procedures in the banking system, in particular, those related to transportation of currency valuables and collection of funds, damage and destruction of cash by Ukrainian banks (if the National Bank of Ukraine finds it impossible to take it out). It determines the peculiarities of the functioning of information systems of the National Bank of Ukraine, covers special aspects of the accounting process under the emergency regime of operation and provides guidelines on how to resume the accounting process and put it back on the right track in the event of its disruption.
The Instruction applies to the National Bank of Ukraine, Ukrainian banks and the State Treasury Service of Ukraine if the emergency regime of operation is imposed by virtue of special NBU Board Resolution. The emergency regime of operation of the banking system can be imposed in certain territories and for a specified period.