But another reason for non- performing loans is not fraud, but economic crisis.
Those who took out hard currency loans before the 2013 crisis saw the cost of repayment skyrocket as the hryvnia lost two-thirds of its value following the Euromaidan Revolution.
“Some customers in this situation, instead of finding a way to even reach an agreement with the bank on how to resolve the issue, run away… with the money in their pocket,” Machio said.
The consequences of failing to repaying a loan "are not extremely serious” to the borrower, Machio said, but hurt prospective borrowers as banks curtail credit and impose tougher standards for loans.
Shpek, who is also the chairman of Ukraine’s Independent Bankers Association, says that part of the problem is that the government has led by bad example. For instance, the State Fiscal Service still fails to return value-added tax refunds to banks promptly.
The government is not transparent in identifying problem borrowers.
Shpek said that it makes sense to establish a database of borrowers for banks to consult in order to identify individuals who repeatedly fail to repay loans.
While Ukrainian taxpayers deserve to know who doesn't repay loans – since it’s their money that effectively goes to cover depositers' losses – bank secrecy laws forbid the disclosure of such information by the government.
“But it would be possible to release this information from open sources,” Shpek added.