The National Bank of Ukraine has eased lending conditions for the Deposit Guarantee Fund, which would enhance liquidity support to the DGF and hence strengthen the protection of bank depositor interests.
First, the DGF Bank shall have the right to request the NBU to change loan agreement terms and conditions, if there is a well-substantiated need for that. The DGF should submit its request for amending the terms and conditions of the loan agreement no later than 15 days prior to the next loan payment due date.
In particular, the DGF will be able to extend the maturity period of loans granted by the NBU. The overall loan maturity period including all roll-over periods may not exceed 5 years. Also, if the loan maturity period is extended, an interest rate on this loan shall be set at the effective interest rate in the original loan agreement but not lower than the NBU’s key policy rate at the date of the decision to extend the loan maturity period.
Second, the NBU has eased maturity requirements for government bonds pledged by the DGF as collateral against loans. Until now, the NBU has accepted as collateral domestic government bonds maturing not earlier than in two days after the date of full repayment of the loan. From now on, the NBU will accept as collateral domestic government bonds maturing not earlier than in one day after the date of full or partial repayment of the loan.
The NBU has also specified the rules governing loan servicing if the DGF has spare liquidity. The DGF will be required to fully or partially repay the loan before it falls due if it has spare liquidity based on monthly calculations as mandated by the Law of Ukraine On Households Deposit Guarantee System. However, the minimum amount of funds available to the GGF cannot be lower than 2.5% of the guaranteed amount of deposits.
In its turn, the NBU shall be authorized to collect loan repayments through direct debit from the DGF’s current accounts at the redemption date if it falls on the loan repayment date.
These moves will enable the NBU to enhance efficiency in dealing with the DGF and mitigate the central bank's exposure to risks.
The amendments to this effect are entrenched by NBU Board Resolution No. 47 of 7 June 2017 On Approval of Amendments to the Regulation on the Provision of Liquidity Support by the National Bank of Ukraine to the Deposit Guarantee Fund , which shall come into effect from 8 June 2017.