The Verkhovna Rada, Ukraine's parliament, has passed Bill No. 1109 to limit the total amount of payments collected from a borrower along with penalty and interest in case of default on microloans.
The volume of funds collected shall not be more than double the loan body.
Read alsoState banks write off UAH 26 bln in non-performing loansThe bill that expands the list of loan agreements covered by the law of Ukraine on consumer lending was backed by 310 MPs with the required minimum of 226 votes, an UNIAN correspondent reported on September 16.
Cap on recovery: details
The memo to the bill says the ceiling set on deb recovery for loans not exceeding the minimum wage is limited to twice the amount of such loan, regardless of the parties' agreements.
In addition, the new draft law requires the borrower's consent to the transfer of information to the credit bureau for the conclusion of a loan agreement.
Background
- In December 2019, the Verkhovna Rada passed at first reading the bill on the introduction of a tool to protect debtors' rights and legitimate interests from unscrupulous collectors.
- Bill No. 2133 on protection of rights and legitimate interests of debtors was registered in the Rada on September 12, 2019.
- The adopted law came into force on January 20, 2020.
- Banks were required to disclose the cost of consumer credit.
- Bill No. 1109 to expand the list of credit agreements covered by the law of Ukraine on consumer lending passed its first reading on February 4, 2020.
- On August 25, 2020, the National Bank of Ukraine (NBU) announced plans to create a register of collectors and update approaches to regulating this business in Ukraine.
- As of August 30, 2020, Ukrainian state-owned banks wrote off UAH 26 billion (US$926.6 million) in non-performing loans.
- On September 9, 2020, the NBU elaborated on the protection against collectors.