The National Bank of Ukraine (NBU) welcomes the long-awaited approval by the Verkhovna Rada of Ukraine of Draft Law No. 6027-д On Amendments to Certain Legal Acts of Ukraine on Resumption of Lending in the first reading. 237 MPs have voted in favor.
"We consider this draft law a precondition of full-scale resumption of lending in the Ukrainian economy. The draft law is also one of the priorities of the government for 2018 and has full support of the NBU," noted NBU Governor Yakiv Smolii during the consideration of the draft law at the parliamentary plenary session.
According to the Governor, full-scale resumption of lending is blocked by a number of gaps in applicable law of Ukraine that hold back performance of the banking sector. In particular:
- ineffective (on paper) suretyship, including a wide-spread scheme for evading liabilities under surety agreements by winding up the main corporate borrower
- complicated and risky mechanism for estimating the variable interest rate
- insufficiency of out-of-court instruments that in practice nullifies out-of-court settlement
- biased appraisal of mortgaged property that is recognized in the balance sheet of the lender for debt settlement, if the tender is declared invalid
- legal provisions authorizing cancelation of the mortgage in court despite outstanding debt of the borrower to the lender
- gaps in laws that allow alienation of borrowers’ property without consent of the pledge holder
- inability of a bank to check in the State Civil Status Register information effecting the means of a person to discharge liabilities etc.
Draft Law No. 6027-д that was approved in the first reading will resolve issues that cause systemic hurdles for lending resumption in the national economy and generate additional risks for national and foreign investors.
Thus, if lenders’ rights are protected, banks will set more lenient requirements to potential borrowers. This will foster active lending, reduce the cost of credit resources and respectively improve accessibility of banking products for business entities and individuals.