Banks may be allowed to write off up to 100% of military credit debts: the Rada pointed out the problems with the bill

In Ukraine, it is proposed to introduce a mechanism for forgiving or canceling credit debt for certain categories of military personnel, civilians and their family members. However, debt cancellation will not be mandatory for banks: the creditor will be able to decide for himself whether to forgive the debt and in what amount. The Main Scientific and Expert Department of the Verkhovna Rada believes that draft law No. 15458 needs to be revised.

Who will be able to apply for loan cancellation

Draft law No. 15458 provides for amendments to the laws “On Consumer Lending”, “On Enforcement Proceedings” and the Tax Code.

In particular, family members, heirs and representatives of military personnel who died, died or went missing, as well as persons in captivity, will be able to apply to the creditor with a request for forgiveness or cancellation of debt.

The mechanism is also proposed to be extended to certain categories of civilians and persons with disabilities as a result of the war.

The bank itself will decide whether to write off the debt

One of the key features of the draft law is that the creditor receives the right, not the obligation, to write off the debt.

The bank or other lender will be able to independently decide to forgive 100% of the debt or only part of it.

At the same time, the draft law does not specify clear criteria by which the creditor should make such a decision. The grounds for refusal, the terms for considering the application, the procedure for considering it, and the possibility of re-applying are not specified.

The GNEU warns that in fact the debt write-off remains at the discretion of the creditor, and this may lead to different application of the norms to people who are in the same legal situation.

There are also questions about the list of recipients

The experts also identified terminological and internal inconsistencies. In particular, the document uses different concepts to define persons who are in captivity, deprived of personal liberty, or have disappeared.

Special attention is drawn to the concept of “civilians”: the draft law does not define its content and does not clearly establish who exactly the relevant mechanism will cover.

In addition, the list of persons who have the right to apply for debt write-off does not fully coincide with the list of those in respect of whom the creditor will be able to make a relevant decision.

The draft law requires further development

The GNEU also drew attention to the lack of proper calculations regarding the possible impact of the proposed changes on the state budget and the financial services market.

Among the key issues that are proposed to be developed are the criteria for writing off loans, grounds for refusal, deadlines for considering applications, the procedure for determining the amount of forgiven debt, the list of persons who will be entitled to such a mechanism, as well as tax provisions.

Thus, draft law No. 15458 does not provide for automatic writing off of loans to military personnel. Even if it is adopted in the proposed version, the final decision on whether to forgive all or part of the debt will remain with the creditor.