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New Rules for Banks and Nonbank Financial Institutions Engaged in Lending to Operate in Wartime

New Rules for Banks and Nonbank Financial Institutions Engaged in Lending to Operate in Wartime

The National Bank of Ukraine welcomes the adoption of the Law of Ukraine No. 2120-IX On Amendments to the Tax Code of Ukraine and Other Laws of Ukraine Regarding the Application of Provisions Under Martial Law (hereinafter referred to as the Law).

The new Law has amended a number of rules for banks and nonbank financial institutions, specifically those providing lending services. The amendments are intended to make payments easier for borrowers in Ukraine in wartime and during the post-war economic recovery.

To this end, the new Law provides that under martial lawand within thirty days after it is terminated or lifted,  consumers shall not be liable to a creditor, if they fail to fulfill their obligations on their consumer loan.

Additionally, if consumers delay in loan payment, they shall be released from penalties (fine, interest) and other charges for failure to meet the obligations under a consumer loan agreement.

Furthermore, if consumer fails to fulfill their obligations under consumer loan agreement, the Law prohibits an increase in the interest rate on such loans, except when the adjustable rate is provided for in the loan agreement or consumer loan agreement.

At the same time, penalties (fine, interest) and other charges under consumer loan agreement accrued for  overdue payments under such an agreement from and including 24 February 2022 are subject to a write-off.

It is important to note that the new rules do not cancel the payment of interest rate for the use of loans. The accrual by the creditor is lawful. The loan repayment holidays is a payments deferral, not forgiveness. Also, the loan repayment holidays are the creditor’s right, not their obligation. Therefore, the NBU recommends to arrange the loan repayment holidays directly with the creditor. However, if borrowers have sufficient income to continue their activity and service their debt, they should proceed with their payments.


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