Farmland possession limit not to apply to banks – adviser to PM
Bill No. 2178-10 on the turnover of farmland prepared for second reading does not foresee restrictions for banks regarding farmland possession, Economic Adviser to the Ukrainian Prime Minister Oleksiy Mushak has said.
"Banks will not be subject to the restriction of 10,000 hectares in one hand. About 50 of our banks are ready to lend under land transactions. Accordingly, the restriction of UAH 10,000 would make it possible to lend money for the purchase only to 500,000 hectares, and this is less than 2% of the market," he wrote on his Facebook page on Friday.
According to the adviser, in case of withdrawal of collateralized land into ownership, the bank must sell it at an electronic auction within two years. Otherwise, the land is seized from the bank under a special procedure.
In addition, Mushak said that the buyer is obliged to provide documents on the legality of the origin of the funds, and non-cash payment is provided for the purchase of land.
Asked if banks with foreign capital are able to receive land as collateral, the premier's adviser said: "All banks operating under the laws of Ukraine will have this opportunity."
A separate task after the adoption of the law, according to the adviser to the prime minister, will be to work with bylaws of the National Bank of Ukraine.
"It is necessary to increase the coverage ratio for land from the current 0.35 to 1.0. Otherwise, with land worth $100,000, it will be possible to take a loan of only $35,000, and [it is required] also change the criteria for borrowers involved in land operations, since now there are a large number of farmers, having a profitable business, is working in the shadow and will not be able to prove its solvency to the bank. Accordingly, they will be outside the loan market," Mushak said.