Secret orders: banks will reduce credit limits for the military personnel
21 March 2024 17:45
ЕКСКЛЮЗИВ
Banking institutions receive instructions from their management to reduce or cancel credit limits for military personnel. An employee of a well-known Ukrainian bank told Komersant ukrainskiy 
on condition of anonymity.
The bank employee said that the orders are for internal use and are related to the law passed today, which provides for the cancellation of interest rates and the imposition of penalties for military personnel.
The Verkhovna Rada of Ukraine today passed draft law No. 10313, which strengthens social protection for military and police officers. The document was supported by 296 MPs.
The law states that military personnel are exempt from paying interest on loans, as well as fines and penalties for defaulting on obligations to institutions of all forms of ownership.
What loan benefits are military personnel entitled to
It should be noted that all military borrowers are entitled to the benefits set out in the Law of Ukraine “On Social and Legal Protection of Servicemen and Members of Their Families”, namely, they are exempt from paying penalties and interest on loans and credit cards.
Except for loan agreements for the purchase of property that is or will be classified as housing (a house, apartment, future real estate, housing under construction, property rights to them) and/or a car.
The benefits apply not only to banking institutions, but also to all credit institutions, including MFIs, pawnshops, credit unions, leasing companies and other legal entities and individuals providing financial services.
The benefits on loan obligations are valid for military personnel from the beginning to the end of the special period. And for reservists and persons liable for military service – from the moment of call-up during mobilisation until the end of the special period.
To be exempted from fines, penalties and interest on the loan, servicemen and women must notify the bank in writing of their military service and provide documents confirming this.
What you need to know about lending under martial law
Since the outbreak of full-scale war, many banks have understood the situation of their clients and introduced some changes in their operations:
- Moratorium on loans. In the early days of the war, a loan moratorium was introduced, which prohibited banks and other financial institutions from demanding repayment of loans from borrowers. This moratorium was in effect until the summer of 2022.
- Loan repayment holidays. Borrowers were given the opportunity to apply for a loan repayment holiday. This means that they can temporarily suspend loan payments for up to 6 months.
- Loan restructuring. Banks offer their clients loan restructuring. This means changing the terms of the loan, such as extending the loan term or reducing the interest rate.
For example, most banks have introduced loan repayment holidays for clients for a period of 1 to 3 months from the date of the introduction of martial law by cancelling mandatory monthly payments, charging interest on the use of loan funds, and applying penalties for failure to comply with the terms of the loan agreement.
What does a credit limit mean?
A credit limit is a bank’s authorised permission to use a loan from a financial institution within a clearly defined amount. Theoretically, a credit limit can also be set for a regular current account, which, by the way, is widely used in business lending.
The Bank has the right, at its sole discretion, to revise the limit to be used within the amount of the Credit Limit.
