A new draft law No. 12044 dated September 19, 2024 was registered in the Verkhovna Rada of Ukraine, which is aimed at solving important problems in the field of financial services that arose as a result of the war. The bill envisages the introduction of a new type of bank — financial inclusion banks. Their goal is to provide access to financial services for socially vulnerable population groups and micro-enterprises, especially in areas close to war zones, liberated territories and hard-to-reach regions. This will become part of the state strategy to support financial inclusion, which is extremely important in the current difficult conditions.
Reasons for drafting the draft law
The hostilities that have been ongoing in Ukraine since February 2022 have led to significant losses in the banking infrastructure. Many bank branches have been destroyed or closed due to security risks, as well as economic hardships caused by shrinking populations in conflict zones and rising operating costs. As a result, the number of bank branches decreased by 1,582 units, and the number of working ATMs decreased by 2,579 units. This significantly affected the ability of citizens and micro-enterprises to receive financial services.
In addition, problems with access to banking services have become particularly acute in frontline and liberated regions, where the banking infrastructure is either destroyed or operates with major disruptions. In particular, frequent power and communication outages make remote service difficult, and internal migration increases the burden on bank branches in safe regions.
The main provisions of the draft law
The draft law provides for amendments to two main legislative acts — the Laws of Ukraine "On Banks and Banking" and "On the National Bank of Ukraine". It is proposed to introduce a new type of banking institution — a financial inclusion bank, which will operate on the basis of a special limited banking license.
The main beneficiaries of this innovation will be residents of areas close to the combat zone, residents of liberated territories and hard-to-reach regions, such as mountainous areas. The introduction of financial inclusion banks is aimed at restoring economic ties in these regions and providing their residents with basic access to financial services, which will stabilize the local economy and ease living conditions.
The main provisions of the activity of financial inclusion banks:
1. Limited banking license: These banks will have a license that allows them to provide only certain types of financial services aimed at socially vulnerable population groups and micro-enterprises. This will limit their activities and ensure that they focus on the customers who need the most help.
2. Ban on operations for large companies: Banks of financial inclusion will not be able to work with large business entities whose annual income exceeds 2 million euros. This restriction is intended to prevent banks' resources from being diverted from their primary goal of providing access to finance for small businesses and socially vulnerable populations.
3. Lending limits: It is proposed to set limits on the total volume of credit funds that can be provided to one borrower.
For individuals, the maximum amount owed on loans for a term of up to one year cannot exceed 12 times the minimum monthly salary, which currently amounts to UAH 96,000. For loans with a term of more than one year, with the exception of housing loans, this limit increases to 36 minimum salaries, which is equivalent to UAH 288,000. If the loan is granted for the purchase or reconstruction of housing, its limit cannot exceed 240 minimum salaries, which is 1,920,000 UAH. For business entities, state authorities and local self-government bodies, the maximum amount owed on loans is limited to 2,400 amounts of the minimum salary, i.e. 19,200,000 UAH.
4. Clear regulation of activities: The draft law envisages providing financial inclusion banks with clear rules for servicing target groups of clients — the population in front-line zones, liberated territories and hard-to-reach regions. These banks will be prohibited from conducting operations on the capital markets, which will help them avoid risky financial deals and focus on serving their core clients.
5. Definition of key terms: The bill will for the first time at the legislative level define the concepts of "financial inclusion", "limited banking license", "financial inclusion bank". This will ensure an unambiguous interpretation of these terms and avoid legal uncertainty in the process of implementing the law.
Thus, the introduction of financial inclusion banks is an important step to ensure access to financial services in wartime. These new institutions will be able to effectively respond to the challenges that have arisen due to the destruction of the banking infrastructure and internal population migration. The bill aims to ensure stable access to financial services for the most vulnerable categories of citizens and micro-enterprises, which will allow them to recover and develop despite the challenges of wartime.
Also, the draft law creates important prerequisites for the further economic recovery of the country and ensures the stability of the financial system in the territories most affected by military operations.
If you are interested in opening your own financial inclusion bank and want to take advantage of the opportunities provided by the new draft law, our law firm is ready to provide you with full legal support. We will help with the preparation of documents, advise on compliance with legal requirements and support the process of obtaining a limited banking license. Contact us for professional advice and reliable legal support at all stages of opening a financial inclusion bank.
Reasons for drafting the draft law
The hostilities that have been ongoing in Ukraine since February 2022 have led to significant losses in the banking infrastructure. Many bank branches have been destroyed or closed due to security risks, as well as economic hardships caused by shrinking populations in conflict zones and rising operating costs. As a result, the number of bank branches decreased by 1,582 units, and the number of working ATMs decreased by 2,579 units. This significantly affected the ability of citizens and micro-enterprises to receive financial services.
In addition, problems with access to banking services have become particularly acute in frontline and liberated regions, where the banking infrastructure is either destroyed or operates with major disruptions. In particular, frequent power and communication outages make remote service difficult, and internal migration increases the burden on bank branches in safe regions.
The main provisions of the draft law
The draft law provides for amendments to two main legislative acts — the Laws of Ukraine "On Banks and Banking" and "On the National Bank of Ukraine". It is proposed to introduce a new type of banking institution — a financial inclusion bank, which will operate on the basis of a special limited banking license.
The main beneficiaries of this innovation will be residents of areas close to the combat zone, residents of liberated territories and hard-to-reach regions, such as mountainous areas. The introduction of financial inclusion banks is aimed at restoring economic ties in these regions and providing their residents with basic access to financial services, which will stabilize the local economy and ease living conditions.
The main provisions of the activity of financial inclusion banks:
1. Limited banking license: These banks will have a license that allows them to provide only certain types of financial services aimed at socially vulnerable population groups and micro-enterprises. This will limit their activities and ensure that they focus on the customers who need the most help.
2. Ban on operations for large companies: Banks of financial inclusion will not be able to work with large business entities whose annual income exceeds 2 million euros. This restriction is intended to prevent banks' resources from being diverted from their primary goal of providing access to finance for small businesses and socially vulnerable populations.
3. Lending limits: It is proposed to set limits on the total volume of credit funds that can be provided to one borrower.
For individuals, the maximum amount owed on loans for a term of up to one year cannot exceed 12 times the minimum monthly salary, which currently amounts to UAH 96,000. For loans with a term of more than one year, with the exception of housing loans, this limit increases to 36 minimum salaries, which is equivalent to UAH 288,000. If the loan is granted for the purchase or reconstruction of housing, its limit cannot exceed 240 minimum salaries, which is 1,920,000 UAH. For business entities, state authorities and local self-government bodies, the maximum amount owed on loans is limited to 2,400 amounts of the minimum salary, i.e. 19,200,000 UAH.
4. Clear regulation of activities: The draft law envisages providing financial inclusion banks with clear rules for servicing target groups of clients — the population in front-line zones, liberated territories and hard-to-reach regions. These banks will be prohibited from conducting operations on the capital markets, which will help them avoid risky financial deals and focus on serving their core clients.
5. Definition of key terms: The bill will for the first time at the legislative level define the concepts of "financial inclusion", "limited banking license", "financial inclusion bank". This will ensure an unambiguous interpretation of these terms and avoid legal uncertainty in the process of implementing the law.
Thus, the introduction of financial inclusion banks is an important step to ensure access to financial services in wartime. These new institutions will be able to effectively respond to the challenges that have arisen due to the destruction of the banking infrastructure and internal population migration. The bill aims to ensure stable access to financial services for the most vulnerable categories of citizens and micro-enterprises, which will allow them to recover and develop despite the challenges of wartime.
Also, the draft law creates important prerequisites for the further economic recovery of the country and ensures the stability of the financial system in the territories most affected by military operations.
If you are interested in opening your own financial inclusion bank and want to take advantage of the opportunities provided by the new draft law, our law firm is ready to provide you with full legal support. We will help with the preparation of documents, advise on compliance with legal requirements and support the process of obtaining a limited banking license. Contact us for professional advice and reliable legal support at all stages of opening a financial inclusion bank.