Access to Foreign Currency Loans Simplified for Businesses

The National Bank of Ukraine (NBU) has simplified conditions for increasing loan resources in foreign currencies to Ukrainian businesses and improved the mechanism to prevent their outflow from Ukraine.

For this purpose, the NBU by its Board Resolution No. 404 dd. 22 November 2016 has amended the Regulation on the procedure for receiving loans and credits in foreign currency by residents from non-residents and granting loans in foreign currency by residents to non-residents.

The document enshrines an exception from the general procedure controlling the adherence to the maximum interest rates under external loans or credits taken by a resident borrower (a company or a financial institution) from a non-resident lender with the participation of an export credit agency (ECA).

Now the NBU exercises control over the value of external private borrowings in the form of foreign currency loans or credits which may not exceed the established threshold (the threshold value of maximum interest rates fixed by the NBU Resolution No. 363 dd. 3 August 2004). However, in the future, such control over the amounts payable by a resident for using the loan will not take account of payments made by a resident to a non-resident to reimburse for actual expenses incurred by such non-resident to pay for the ECA services (remuneration, premiums, commissions, etc.). In this case, the respective ECA must be included in the list posted on the OECD official website.

This step is expected to enhance residents’ access to external loan resources granted through ECAs.

Besides, the National Bank of Ukraine has additionally provided for banks to carry out analysis of sources of foreign currency funds owned by residents (without the financial institution status) intending to use such foreign currency for lending to non-residents. This approach will disable the corporate residents’ use of foreign currency received as a loan or credit, for lending to non-residents outside Ukraine on the basis of the individual licence issued by the NBU.

The above resolution takes full force on 30 November 2016.

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