Since December 2024, Ukrainian banks have been providing loans to agricultural companies under the preferential lending program “5-7-9%” only on condition of compliance with environmental and social (ES) standards.

This is stated in the “Financial Stability Report” of the National Bank of Ukraine.

As noted, the relevant standards were developed by the FRP – the program manager – together with the World Bank.

“From now on, banks must assess the client’s ES risks when issuing loans. High-risk projects, as well as enterprises with activities that fall into the list of exceptions, will not be financed at all. The bank may provide a loan to companies with medium risks. However, in this case, the borrower develops an action plan to reduce ES risks, which will become part of the loan agreement. Clients with low ES risks can be financed without additional restrictions,” the NBU explained.

The implementation of EU standards will require banks and borrowers to strengthen their expertise in the relevant areas. Changes in approaches to lending and the credit process may somewhat slow down the growth of the program’s portfolio, the regulator acknowledges.

“In the future, these requirements will be extended to other industries,” the NBU adds.

At the same time, it is noted that due to high costs for the accumulated portfolio and further growth in loans, the program’s annual budget was exhausted in October.

“The debt to banks under the program by the end of the year will be close to UAH 10 billion, which is UAH 3 billion more than last year. This creates additional uncertainty for banks and borrowers participating in the program and slows down its work,” the NBU explained.

Source: https://agroportal.ua/