The National Bank of Ukraine (NBU) on Tuesday released initiatives for legislation that aim to improve the situation of the banking industry and other matters affecting the economy.
The legislative initiatives that the NBU is proposing would establish a framework to help protect lenders and creditors and to enhance the investment climate overall in the country. One of the larger obstacles facing banks and other lenders is the borrowers not meeting the terms of loan contracts, putting the lending entity under financial strain. This has led to weak financial standing and some banks filing for bankruptcy, said Vikto Novikov, the director of the NBU's Legal Department.
Also among the legislative initiatives is the legal framework that pushes accountability of bank's performance on shareholders and owners of the bank.
"The first thing that we plan to do is to impose tougher restrictions on insider lending practices of banks," said Oleksandr Pysaruk, first deputy governor of the NBU. "These transactions, especially if carried out on a large scale, undermine the banking sector stability. Secondly, we intend to reinforce bank owners and managers' responsibility for carrying out transactions with related parties, misreporting and action or omission that ultimately have led to the bank going bankrupt. The relevant amendments are currently being developed."