NBU explains how military personnel can settle credit issues during service
30 October 21:21
The National Bank of Ukraine and PrivatBank have explained how the loan obligations of military personnel who are temporarily unable to make monthly payments due to mobilization or service are currently being settled. It is about the use of restructuring tools and benefits that reduce the burden on borrowers and reduce the risk of delays for the banking system, "Komersant Ukrainian" reports.
The NBU emphasizes that any changes to the terms of the loan agreement, such as deferred payments, revision of the interest rate, fees, or schedule, are possible only by mutual agreement between the borrower and the bank. This is expressly provided for in Article 17 of the Law on Consumer Lending. If the client is unable to service the debt in the current mode, the bank may offer restructuring, i.e. change the repayment procedure and terms to make payments feasible.
What benefits are currently available for the military?
Military personnel have a special regime: they are not charged fines, penalties, or interest for late monthly payments. An exception applies to special-purpose loans for housing, cars, or energy equipment. In such cases, interest may be compensated by the state or a third party under separate mechanisms. To activate the benefits, you must submit official documents to the bank confirming your service.
PrivatBank offers: from a symbolic rate to a temporary reduction in payments
The bank has outlined several working options for military borrowers:
- automatic debiting of funds from the account
- payment of the loan by a relative;
- restructuring.
For loans issued before August 2022, the interest rate may be reduced to a symbolic 0.001%. For loans issued after this date, the bank offers a temporary reduction of the monthly payment by 50% for up to one year. In each case, the decision is made individually based on the client’s application and a package of supporting documents.
Read also: Why it is difficult for Ukrainians to take out a mortgage in times of war and economic instability
Problems with loans: why it is important to apply officially
“PrivatBank emphasizes that mobilization itself is not legally an “insurmountable circumstance” that automatically changes contractual obligations. At the same time, the bank is ready to meet the borrower’s needs if he or she submits a formal application for restructuring in a timely manner and provides proof of military service status. This triggers the procedural mechanism for agreeing on new terms and minimizes the risks of accumulating delinquencies.
Algorithm of actions for a military borrower
In practice, this happens as follows:
- the borrower applies to the bank with a written application, enclosing documents on service and, if necessary, a brief explanation of the financial situation;
- the bank analyzes the application and offers one of the following scenarios: deferral, schedule change, temporary reduction of payments or interest rate;
- the agreed changes are recorded in an additional agreement.
It is important to read all the terms and conditions carefully: the duration of the benefit, the procedure for returning to the standard schedule, and the amount of payments after the end of the relief period.
Exceptions and special cases: mortgages, cars, energy equipment
There are separate mechanisms for mortgage loans, car loans, and loans for energy equipment, where the interest can be compensated by the state or a third party. The specific procedure depends on the program and the source of financing, so banks ask clients to clarify the terms and conditions directly when applying. The preferential regime does not eliminate the need to communicate with the bank: without an application and documents, support mechanisms simply will not work.
Why you should avoid “silent” delays and unilateral decisions
The NBU reminds that the agreement cannot be changed unilaterally. If the borrower ignores payments without official contact with the bank, the risks of deterioration of the credit history and accrual of debt after the grace period expires increase.
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For example, in the spring of this year, some banks, including Monobank, limited credit lines to the military due to a lack of budget funding to compensate for interest. This case showed that difficulties should be reported in advance and an individual solution should be agreed upon, rather than leading to automatic restrictions.
Currently, the current support model is based on two principles: legal certainty (changes only by agreement of the parties) and targeted benefits for the military (no fines or penalties, with some exceptions for targeted loans). For old loans, PrivatBank may offer an interest rate of 0.001%, and for newer loans, a temporary halving of payments per year. The key to implementation is the borrower’s official application with documents. This reduces the debt burden during the service and at the same time allows banks to maintain risk management, which is critical for financial stability in times of war.
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