In conditions of an emergency mode banks may destroy cash and create mobile units

Photo: PHL

The National Bank of Ukraine regulated the procedure for the operation of the banking system in conditions of the emergency mode. This week, the NBU approved the corresponding instruction, sent it to the banks and published it on its official website. The emergency operation regime shall be introduced by a separate resolution of the NBU during the anti-terrorist operations (ATO) and man-caused and natural disasters, the NBU says. The effect of the emergency mode may be applied to separate territories and for a defined term. Yesterday the NBU announced an emergency mode in the Donetsk and Luhansk oblasts and the Autonomous Republic of Crimea.

Although the document did not pass the registration process with the Ministry of Justice, based on the practice of the NBU it can be considered effective, says partner of the law firm FCLEX Andriy Nikitin. Prior to that, the banks drafted their own programs for working in crisis conditions based on the instruction of the central bank.

Only one document factored in the existing practice and supplemented normative documents already drafted by the majority of banks, bankers claim. «The NBU instruction is partially invoked by existing procedures of banks and do not contradict them in any way,» noted Chairman of the Board of Khreshchatyk Bank Dmytro Hrydzhuk.

The Independent Association of Ukrainian Banks (IAUB) also welcomed the instruction. «Recently, on many occasions Ukrainian banks had precepts for applying the specified rules. I think that if banks were guided by this instruction in Crimea or in eastern regions of Ukraine, the financial losses from the actions of occupants and terrorists could have been avoided,» said Acting Executive Director of the IAUB Olena Korobkova.

Smeared money

In its instruction the NBU is exposing the procedures of actions if there is no possibility to withdraw cash from territorial administrations and commercial banks. In such a situation cash should be either painted in special colors or destroyed, it is written in the document.

The drafted act will compensate cash in the future. In a situation when bank branches cannot service clients, mobile banks can be opened in separate premises to guarantee payouts of wages and pensions, as well as from armored vehicles. The procedure of the work of such mobile units will be determined by the internal position of a bank, according to the NBU instruction. Earlier in Ukraine such so-called cash wickets and mobile outlets were opened to bring services closer to customers, recalls Hrydzhuk.
Seeing as Ukrainian legislation stipulates that a bank branch should have a legal address, similar institutions were registered with already existing stationary units. The practice of mobile banking institutions is widespread in western countries and Russia has similar experience, noted Vice Chairman of the Board of Terra Bank Ihor Shevchenko.

«Armored cash booths are being installed in buses as well as terminals and ATMs for clients. It travels through remote populated areas where it collects payments and issues cash,» said the banker.

Extreme cases

The NBU was prepared for the worst case scenario when cities, counties and provinces in Ukraine would have to be shut off from electronic payments systems and the work of the NBU would have to be relocated to a reserve location or one of the territorial administrative offices.

Aside from that, the instruction gives the NBU the right to demand from banks «any additional information», suspend and ban their operation and the execution of certain transactions and shut them off from the system of electronic payments. However, bankers are confident that the NBU will not abuse its powers stipulated in the document. «The national bank will not penalize banks and will make such decisions only when necessary,» Hrydzhuk assured.