The National Bank of Ukraine has expanded the opportunities for restructuring the Ukrainian companies’ currency debt to further increase their authorized capital. To this end, the appropriate changes have been made to NBU Board Resolution in force No 342 On Resolving the Situation in the Money and Foreign Exchange Markets of Ukraine dated June 07, 2016.
Currently, residents can repay foreign currency credits and loans under agreements with non-residents on or after the term provided in the agreements. Early repayment is possible in the following cases only:
- early refunds are allocated for additional capitalization of an authorized borrowing bank;
- restructuring of obligations by borrowing with a later deadline is done;
- an international financial institution acts as a creditor;
- a portion of such credit or loan is provided by a foreign export credit agency.
The NBU Board has decided to extend the list of exceptions. Namely, it allows reducing the foreign currency credit or loan repayment period for a resident client, other than a bank, to a non-resident if a debt restructuring is done, where claims on the principal of a credit or loan are set off as an additional non-resident’s contribution to the resident’s authorized capital. This will facilitate reducing the external private debt of Ukraine with no foreign currency outflow from Ukraine and with no additional pressure on the foreign exchange market of the country.
In the meantime, the National Bank has introduced a number of other changes to NBU Board Resolution No. 342.
First, the procedure for currency purchase and transfer to pay for treatment of individuals abroad is simplified. The information about these transactions will be entered into the register without submitting relevant documents to the NBU. At that, an authorized bank will be able to buy foreign currency for a client for these purposes the next day after remittance of funds in UAH for the purchase, and in case there are own funds in foreign currency available - on the day a client submits his payment order to the bank.
Second, control over balances of the resident clients’ accounts (except for individuals) when buying foreign currency is improved. Before, it was exercised by the National Bank on the date of getting information about this transaction in the relevant register. Henceforth, it will be assigned to the authorized banks, which will exercise this control on the date when currency is purchased.
In addition, the NBU Board has changed the Rules Governing the Establishment of Registers by Authorized Banks, approved by Resolution № 247 of the Board on April 07, 2016. The Rules take into account cancellation of the requirement for residents to provide to the National Bank a Cost Examination Report issued by SC “Derzhzovnishinform” to pay for import of services. It is a reminder that this requirement was lifted on August 19, 2016 due to the fact that it lost its effectiveness as a practical tool to combat the capital outflow. Thus, the National Bank has simplified the conditions for import of services without weakening control over the foreign economic operations.
Also, the NBU Board has amended the Regulations on the Procedure for Obtaining Foreign Currency Credits, Loans from Non-residents and Granting Foreign Currency Loans by Residents to Non-residents, approved by NBU Resolution No. 270 on June 17, 2004. The Board has strengthened the authorized banks’ responsibility for verification and analysis of documents (information) in registering and maintaining credit agreements and loan agreements which provide for fulfillment of currency obligations to non-residents, in particular, by identifying the indicators of a risky financial transaction. With the same purpose, it has extended the list of grounds for the National Bank to reject registration and cancel registration of a credit agreement and a loan agreement.
All the described changes have been approved by NBU Board Resolution No. 375 On Amendments to Some NBU Resolutions dated August 23, 2016. They will come into effect on September 1, 2016. However, the changes to NBU Board Resolution № 342 will stay in force until this document expires, that is, through September 14, 2016.