The state is to blame for everything: Horokhovsky explains why banks do not issue loans to the military
13 May 08:30
Domestic banks do not provide free loans to military personnel, but this is not their fault. Oleg Gorokhovsky, co-founder of Monobank, wrote about this, accusing the state of creating impossible conditions for banks, "Komersant Ukrainian" reports.
The problem, as it turned out, is that the state simply did not provide a mechanism for compensation for banks, the businessman said.
“There is a law (paragraph 15 of Article 14 of the Law of Ukraine “On Social and Legal Protection of Military Personnel and Members of Their Families”) according to which banks have no right to charge interest and fines to the military… The law was adopted, but the source of funding for this provision of the law was not provided,”
– horokhovsky wrote.
Servicemen who were called up for military service during mobilization… as well as their wives (husbands)… during the special period… are not charged with fines, penalties for failure to fulfill obligations to enterprises, institutions and organizations of all forms of ownership, including banks, and individuals, as well as interest on the use of credit
clause 15 of Article 14 of the Law of Ukraine “On Social and Legal Protection of Servicemen and Members of Their Families“
In other words, the law does not say that banks are obliged to issue new loans to military personnel. However, they are obliged not to charge interest on existing loans.
“We do not know which of our clients are military and which are not. If a client comes to us and says that he is a military man and asks us to cancel his interest rate on the basis of this law, we immediately do so, but we warn him that we will not be able to provide him with new tranches of free loans, as we do not have free deposits,”
– explained the co-founder of monobank.
Gorokhovsky emphasized that this practice is typical for all large banks.
“I am very sorry, I would be happy to forgive the military all loans, but then we will have nothing to return their deposits to the depositors,” he said,
– he said.
“Banks will not operate at a loss – it is obvious and no wonder no one is in a hurry to provide free loans.”
– gorokhovsky concluded, pointing directly to the lack of a state mechanism to compensate for such benefits.
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How banks lend to the economy
Apart from the military, banks are very reluctant to lend to farmers from the frontline areas. In general, however, the NBU is preparing the banking system for more active lending to the economy. Thus, in its February review of the banking sector, the NBU stated that net hryvnia loans to businesses have been growing for a year and a half in a row.
Despite a certain seasonal slowdown in the fourth quarter (down to 0.7% qoq), the year-on-year increase was 20.6%. Net hryvnia loans to small and medium-sized enterprises grew somewhat faster – by 1.2% in the fourth quarter, by 22.1% over the year, and their share in the net hryvnia portfolio of business loans increased to 60.2%: by 0.3 pp in the quarter and 0.7 pp over the year.
During the quarter, the volume of loans to food industry and machine building companies increased significantly, while agricultural producers traditionally repaid their loans. Overall, loans to the trade and food industry grew the most over the year.
Favorable lending conditions, including interest rates that are in line with the level of the pre-docking year of 2019, encourage lending and reduce the demand for subsidized loans.
The share of loans granted under the program “Affordable Loans 5-7-9%” in the hryvnia net business portfolio amounted to 33.7% at the end of the year. In a survey on lending conditions, banks noted an increase in business demand for loans due to intentions to make capital investments.
As reported , the National Bank of Ukraine has approved a methodology for stress testing banks in 2025. The test will begin in June and will cover 21 banks, which account for more than 90% of the banking system’s assets.
The assessment will determine whether the banks’ capital meets the established standards in a crisis. In case of deviations from the standards, banks will have to develop and implement a capitalization or restructuring program.
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