Zelensky signs law on consumer lending

Ukrainian President Volodymyr Zelensky on October 6 signed into law Bill No. 552-IX amending certain legislative acts regarding consumer lending, formation and circulation of credit reports.

The Verkhovna Rada, Ukraine's Parliament, passed the relevant draft law on September 15, the president's press service said on October 6.

The document classifiers credit agreements concluded for up to one month and those, where the total loan amount is within the amount of one minimum wage, as consumer loans, covered by Law of Ukraine on consumer lending.

"This creates the conditions for proper regulation of the rapidly growing microcredit market, in particular, determining the conditions for providing and submitting information on microcredits to the Credit Bureau," the report said.

The law also sets the cap on fines and penalties that may be charged for breach of obligations under such loans in the amount not exceeding double the loan body.

Read alsoUkrainians take microloans worth more than Kyiv budgetIn addition, it is forbidden to change the interest rate to the detriment of consumers and apply fines and penalties for the same violation, which will protect citizens from fines and penalties, the amount of which at the moment can exceed the loan body by magnitudes.

"Legislative changes will strengthen protection of microcredit consumers from unjustified debt burden, as well as protect creditors from unscrupulous borrowers and, accordingly, help reduce the share of bad debts," the press service said, adding that the law will come into force on January 1, 2021.

Background:

• Bill No. 1109 to expand the list of credit agreements covered by Law of Ukraine on consumer lending passed its first reading in the Verkhovna Rada on February 4, 2020.
• The bill passed second reading on September 15.
• The National Bank of Ukraine (NBU) says consumer lending in the country is growing at a very high pace of about 30%. The high profitability of this segment is attractive to banks, while demand for such loans is growing due to higher household incomes and optimistic consumer sentiment.