Ukraine’s credit unions have been given increased lending potential after regulatory changes approved by the National Bank of Ukraine (NBU).
The updates, which took effect on 1 January, follow a set of rule changes in December, and introduce three key updates.
The criteria for determining the classification of a borrower-credit union has been simplified, and now focuses on compliance with prudential norms, timely fulfillment of obligations and adherence to enhanced auditing standards. The World Council of Credit Unions (Woccu) says this ensures a more tailored approach to borrower evaluation based on their financial condition, in line with prudential regulations in the EU.
Credit unions in Ukraine can also now use guarantees from the Partial Credit Guarantee Fund in Agriculture as collateral, reducing their overall credit risk by offsetting it with guaranteed amounts, and resulting in enhanced lending capacity in agricultural financing.
Additionally, the approach to valuing off-balance-sheet obligations for calculating capital standards has been revised. This means credit unions can take more into account when assessing borrowers’ needs, potentially expanding their lending potential.
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Woccu has welcomed the changes, the development of which were supported by advocacy efforts through its Grow Project in Ukraine.
Grow is a four-year project funded by the US Agency for International Development (USAID), aiming to expand access to finance through credit unions in Ukraine. The project builds on the Credit for Agriculture Producers Project in Ukraine to increase credit union liquidity, deepen the technical capacity of credit unions, and improve the enabling environment for credit union operations.
“The USAID Grow Project played a crucial role in facilitating these regulatory advancements by collaborating with the NBU and other stakeholders”, said Woccu.
“These changes align credit union regulations with the laws of Ukraine and global best practices, ensuring a more consistent regulatory framework that meets both national legal requirements and internationally recognized standards, and will increase funding opportunities for credit unions to better support their members.”
