NBU expands lending opportunities for defence industry enterprises under state contracts

The National Bank of Ukraine adopted a third package of regulatory changes to support lending to the defence industry, energy sector and businesses affected by the war. Resolution No. 118 entered into force on 14 October, the day after its official publication.

Among other things, the NBU changed the rules for assessing collateral and credit risks. Businesses will now find it easier to obtain loans against defence contracts.

Loans under state contracts

The NBU increased the liquidity ratio for collateral in the form of property rights to contract proceeds in the security and defence sector from 0.3 to 0.75. Banks will be able to apply it if both the counterparty and payer under the contract belong to that sector.

This will allow banks to take a larger share of the value of such collateral into account when assessing credit risk. The provision will remain in force throughout martial law and for 90 calendar days after it ends or is lifted.

“It is important that financial instruments account for the specific nature of defence production and create additional opportunities to access credit resources,” says Hanna Hvozdiar, Deputy Defence Minister.

Inventories as loan collateral

Until 1 September 2027, banks will be able to accept goods in circulation or processing as collateral based on their actual inventory balances. This applies to loans with a term of up to 18 months. The value of the collateral may not exceed the amount specified in the agreement.

This approach will give enterprises more opportunities to raise funding against available inventories for current production needs.

Lending to enterprises affected by the war

If the property of a defence industrial complex enterprise has been significantly damaged, destroyed or mined, banks will be able to assess its debt-servicing capacity using projected operational performance.

The resolution removes the previous geographical restriction on this approach. According to the Defence Ministry, this will make it possible to take an enterprise’s recovery potential into account; together with debt restructuring, the approach may help restore its operations.