Preventing clients from making early withdrawals of deposits feasible task for banks, says first deputy NBU head

12:24

Ukrainian banks should be able to convince their clients not to make early withdrawal of deposits, according to the first deputy head of the National Bank of Ukraine (NBU), Anatoliy Shapovalov.

"This is a feasible task. They can achieve this by increasing interest rates [on deposits] and conducting explanatory work," he told Interfax-Ukraine on December 7, commenting NBU resolution No. 413.

Shapovalov said that banks should more actively hold dialogues with owners of credit and financial institutions on the increase in the size of statutory capitals.

Speaking about the recommendation to cut credit interest rates, he said that the step would allow banks to cut the risk of non-payments on credits taken in the foreign currency.

He said that despite the 40% of weakening of the hryvnia to the dollar, separate banks continue increasing interests on currency credits, which leads to the strengthening of the burden on borrowers to the crucial level.

He also said that the pace of outflow of funds from the banking system fell, although this positive trend still has no stability: the restoration of the inflow of the public's funds to the banking system would allow the final lifting of restrictions in deposit relations between banks and clients.

The director of the department for foreign economic relations at the NBU, Serhiy Kruhlyk, said that banks should more actively explain to their clients that the return of deposits and the payment of interest are possible only after certain credits, which the banks issues using the deposits of their clients, are paid back.

He said that the pace of outflow of deposits from the banking system fell and demand for foreign currency on the cash market has fallen, although these events do not yet justify canceling restrictions.

"Resolution No. 413 does not cancel clauses in resolution No. 319: on the contrary, they strengthen them... The crisis period has not come to an end," he said.