10.02.2017, 17:01
The National Bank of Ukraine Calls on Parliament to Contribute to Efforts to Enhance Trust Between Banks and Their Customers
OREANDA-NEWS. The National Bank of Ukraine calls on Ukrainian MPs to back Draft Law No. 6027 on enhancing trust between banks and their customers.
The aim of the NBU is to restore lending in Ukraine, which impossible to achieve if creditor rights remain unprotected. Ensuring that creditor rights are not violated and establishing an appropriate regulatory framework for their protection of their rights is essential to enhancing trust between banks and their customers. High risks of default on loans are one of the reasons prompting banks to scale down lending and conduct business only with credible clients. Adoption of Draft Law No.6027 could make a difference in improving creditor rights protection and hence boost lending.
There are gaps and loopholes in the Ukrainian laws, which are used by unscrupulous borrowers who turn them into schemes so as not to repay their debts to creditors and get away with delinquent debt settlement. Suretyship arrangements are not efficient and banks risk losing the mortgaged property.
This draft law is intended to close such legal loopholes. Draft Law No.6027 will enable banks to mitigate risks associated with credit operations. In its turn, this draft law will make banking products more accessible and affordable for businesses and individuals.
Draft Law No. 6027, inter alia, is intended to:
• repeal a requirement to notarize a collateral agreement under which a vehicle is pledged as collateral;
• make suretyship arrangements efficient while performing lending operations;
• establish a clear and transparent mechanism for setting a variable interest rate;
• prevent the evasion from fulfilling credit obligations when in case of inheritance ;
• put in place an efficient mechanism allowing creditors to put the mortgage on the balance sheet;
• eliminate risks arising from the unlawful foreclosure of the property (vehicle) transferred to the bank as collateral pledged against loans without the consent of the lender;
• protect the rights of mortgage holders (lenders) in the event of state registration of ownership rights for real estate;
• allow banks to verify information on potential borrowers upon the consent of the latter;
• allow bank to verify information about the death of a customer to deal with heirs; and
• improve out-of-court on out-of-court settlements.
As a side note, improvements in creditor rights protection would enable banks to resume lending is provided for by the Comprehensive Program of Financial Market Development of Ukraine until 2020.
The aim of the NBU is to restore lending in Ukraine, which impossible to achieve if creditor rights remain unprotected. Ensuring that creditor rights are not violated and establishing an appropriate regulatory framework for their protection of their rights is essential to enhancing trust between banks and their customers. High risks of default on loans are one of the reasons prompting banks to scale down lending and conduct business only with credible clients. Adoption of Draft Law No.6027 could make a difference in improving creditor rights protection and hence boost lending.
There are gaps and loopholes in the Ukrainian laws, which are used by unscrupulous borrowers who turn them into schemes so as not to repay their debts to creditors and get away with delinquent debt settlement. Suretyship arrangements are not efficient and banks risk losing the mortgaged property.
This draft law is intended to close such legal loopholes. Draft Law No.6027 will enable banks to mitigate risks associated with credit operations. In its turn, this draft law will make banking products more accessible and affordable for businesses and individuals.
Draft Law No. 6027, inter alia, is intended to:
• repeal a requirement to notarize a collateral agreement under which a vehicle is pledged as collateral;
• make suretyship arrangements efficient while performing lending operations;
• establish a clear and transparent mechanism for setting a variable interest rate;
• prevent the evasion from fulfilling credit obligations when in case of inheritance ;
• put in place an efficient mechanism allowing creditors to put the mortgage on the balance sheet;
• eliminate risks arising from the unlawful foreclosure of the property (vehicle) transferred to the bank as collateral pledged against loans without the consent of the lender;
• protect the rights of mortgage holders (lenders) in the event of state registration of ownership rights for real estate;
• allow banks to verify information on potential borrowers upon the consent of the latter;
• allow bank to verify information about the death of a customer to deal with heirs; and
• improve out-of-court on out-of-court settlements.
As a side note, improvements in creditor rights protection would enable banks to resume lending is provided for by the Comprehensive Program of Financial Market Development of Ukraine until 2020.
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