Publication date: 15.07.2024
Banking activities in Ukraine: Basic provisions and regulation
Introduction
Banking is one of the most important components of the financial system of Ukraine. It ensures the storage, movement and use of financial resources, contributes to the development of the economy and meets the needs of individuals and businesses for banking services. In this article, we will consider the main aspects of banking in Ukraine, its legal regulation, types of banking services, and the main rights and obligations of banks and their clients.
Legal basis of banking activities
The Constitution of Ukraine
The Constitution of Ukraine establishes the basic principles of the country's economic system, including banking, ensuring the right to entrepreneurship, freedom of economic competition and protection of the rights of consumers of financial services.
Law of Ukraine "On Banks and Banking Activities"
The Law of Ukraine "On Banks and Banking Activities" is the main legal act regulating banking activities in Ukraine. This law defines the legal status of banks, the procedure for their establishment, registration, operation and liquidation, regulates the relationship between banks and customers, and sets out the requirements for banking supervision and regulation.
Other laws and regulations
In addition to the main law, banking activities are regulated by a number of other laws and regulations, such as the Laws of Ukraine "On the National Bank of Ukraine", "On Payment Systems and Money Transfers in Ukraine", "On Financial Services and State Regulation of Financial Services Markets", as well as bylaws and regulations of the National Bank of Ukraine (the "NBU").
Types of banking services
Deposit services
Deposit services include acceptance of funds for safekeeping by banks from individuals and legal entities. The main types of deposits are as follows:
- Timedeposits: funds are placed for a fixed term with a fixed interest rate.
- Demand deposits: funds may be withdrawn by the customer at any time without loss of interest.
- Accumulative deposits: allow customers to make regular deposits to their accounts over a specified period.
Lending services
Lending services include the provision of funds by banks on terms of repayment, maturity and payment. Main types of loans:
- Consumer loans: granted to individuals to finance personal needs.
- Mortgage loans: granted for the purchase of real estate, usually secured by a pledge of such real estate.
- Business loans: granted to legal entities to finance their business activities.
- Overdraft: a short-term loan that allows customers to exceed their current account balance.
Cash and settlement services
Cash and settlement services include opening and maintaining bank accounts, making non-cash payments, cash services, processing payment orders and other documents. Key services:
- Payment orders: a tool for non-cash payments between bank clients.
- Cash collection: cash collection and transportation services.
- Cash disbursement: cash transactions through the bank's cash desks and ATMs.
Currency transactions
Banks carry out operations on the purchase, sale and exchange of foreign currency, as well as provide services for international settlements and money transfers. The main types of currency transactions:
- Purchase and sale of foreign currency: exchange transactions with foreign currency.
- International transfers: sending and receiving funds outside Ukraine.
- Documentary letters of credit and collections: international trade instruments that protect the interests of the seller and the buyer.
Investment services
Banks provide investment advisory services, asset management, stock market brokerage, and securities placement. Main investment services:
- Investment advisory: providing advice on investing in various financial instruments.
- Asset management: professional management of clients' investment portfolios.
- Brokerage services: intermediation in the purchase and sale of securities in the stock markets.
Rights and obligations of banks
Rights of banks
- To acceptdeposits: banks have the right to accept funds for safekeeping from individuals and legal entities.
- Togrant loans: banks are entitled to grant loans on terms of repayment, maturity and payment.
- Carry out foreign exchangetransactions: banks are authorised to purchase, sell and exchange foreign currency.
- Conductcash and settlement operations: banks are entitled to open and maintain bank accounts and provide cash and settlement services to clients.
Responsibilities of banks
- To comply with thelaw: banks are obliged to comply with the requirements of Ukrainian law and the NBU's regulations.
- Ensureconfidentiality: banks are obliged to maintain banking secrecy regarding their clients' accounts and transactions.
- Ensuresecurity of customer funds: banks are required to take measures to protect customer funds from fraud, theft and other risks.
- Provide information to customers: banks are obliged to provide customers with complete and accurate information on the terms and conditions of banking services.
Rights and obligations of bank customers
Rights of customers
- Toopen accounts: customers have the right to open bank accounts for depositing funds and conducting transactions.
- To obtainloans: customers have the right to apply to banks for loans on the terms and conditions specified in banking agreements.
- Carry out foreign exchangetransactions: clients have the right to buy, sell and exchange foreign currency.
- Receive information: customers have the right to receive complete and accurate information from banks on the terms and conditions of banking services.
Customer obligations
- To comply with theterms of agreements: customers are obliged to comply with the terms of banking agreements, including timely repayment of loans and payment of interest.
- Provide accurate information: customers are obliged to provide banks with complete and accurate information necessary for opening accounts, obtaining loans and performing other transactions.
- Comply withlegal requirements: clients are obliged to comply with the requirements of Ukrainian legislation regarding financial transactions, including tax legislation.
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