Bad debts could decrease with adoption of bill on resumption of trust between borrowers and creditors - NBU

The National Bank of Ukraine (NBU) expects that the number of bad debts would be reduced in the future with the adoption of the bill on resumption of trust between borrowers and creditors (No. 2286-a), the regulator has reported on its website.

"The bill is intended to settle defects of legislation used by debtors to avoid fulfillment of their liabilities. The protection of rights of creditors would cut risks at all stages of crediting. If the rights of creditors are protected banks will be able to forward more liberal requirements to other potential borrowers. This would promote the active growth of crediting as a financial tool, the reduction of the cost of credit resources and the facilitation of the access to the use of bank products," Director of the Law Department at the NBU Oleh Zamorsky said.

The regulator said that the bill aims at settling the bankruptcy procedure, strengthening the protection of creditors' rights in these procedures, minimizing cases of targeted sale of bankrupts' assets, having open and competitive mechanisms for selling assets at the highest price, the additional protection of ownership rights of creditors under bail-out agreements and in case of inheritance and routing out schemes of unauthorized construction to satisfy claims of creditors under mortgage agreements.

The central bank said that without effective mechanisms for returning funds to the banking system the resumption and growth of crediting of the real economic sector and cheapening of credit resources is impossible.