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KYIV, May 20 (Reuters) - Ukrainian lawmakers on Thursday approved amendments to legislation to strengthen the independence of the central bank and expand its regulatory powers.
The bill, which was passed on a first reading and needs to be voted on a second time to come into force, is a requirement for the government to secure more loans from the International Monetary Fund under a $5 billion programme.
Ukraine secured the IMF deal last year to tide the country through recession caused by the coronavirus pandemic.
But the programme stalled over concerns about central bank independence and the government's efforts to tackle corruption, after the bank's governor resigned complaining of political pressure and the constitutional court overturned some anti-corruption measures.
The new banking bill excludes the possibility for government members to attend meetings of the central bank board with an advisory vote.
It also sets clear requirements for the supervisory boards of banks and gives the central bank more control over the activities, reputation and financial states of banks' major owners, related parties and top managers.
The head of the parliament committee on finance issues Danylo Hetmantsev said that the central bank would gain the power to demand changes of members of banks' supervisory boards and top managers "if they do not ensure financial stability".
"The changes are aimed at strengthening the stability of the banking system," Hetmantsev told lawmakers before the vote.
In 2015-2017, Ukraine closed two thirds of banks, which became insolvent because of their risky non-transparent lending.
The government also nationalized the country's largest lender PrivatBank, whose former owners and management practice created a capital gap of more than $5.5 billion. (Reporting by Natalia Zinets; Editing by Alison Williams, William Maclean)
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