The National Bank of Ukraine has made it easier for Ukrainian business to raise loans in foreign currency and streamlined a mechanism to prevent the outflow of foreign currency funds abroad. To this end, the NBU has amended the Regulation on the Procedure of Obtainment by Residents of FX Credits/Loans from Nonresidents and Disbursement of FX Loans to Nonresidents.
First, the NBU has allowed an exemption from the general rules governing the monitoring of borrowing costs to make sure that they are kept within the limits set by the NBU under loan agreements where a resident borrower (both a company and a financial institution) raises loans from a nonresident creditor through the intermediation of an export credit agencies (ECA). The NBU monitors interest rates on foreign currency loans raised from abroad to make sure that borrowing costs are kept within the limits set by NBU Board Resolution No.363 of 3 August 2004. Going forward, loan servicing costs paid by the resident shall not include payments made by the resident to reimburse nonresident's actual expenses (including remuneration, premium, commission, and other charges) for services provided by the ECA. However, an ECA has to be included in the list published on the website of the Organization for Economic Co-operation and Development (ОЕСD). This move will expand the opportunities for residents to access foreign loans provided through the intermediation of an ECA.
Second, the NBU will require banks to verify the sources of funds in foreign currency used by residents (that do not have the status of a financial institution) to provide loans to nonresidents. This move will prevent resident entities from using foreign currency received as a loan to provide a loan to provide a loan to a nonresident abroad based on the individual license issued by the NBU.
The amendments to this effect are approved by NBU Board Resolution No.404 of 22 November 2016 On Approval of Amendments to the Regulation on the Procedure of Obtainment by Residents of FX Credits/Loans from Nonresidents and Disbursement of FX Loans to Nonresidents. This resolution shall come into effect from 30 November 2016.