MANAGEMENT OF PROBLEM DEBT IN LENDING IN THE BANKING SYSTEM OF UKRAINE

Abstract

The article substantiates theoretical and methodological approaches and applied aspects of managing problem debt in bank lending under martial law and the transformation of the banking system of Ukraine. The concept of 'problem debt in bank lending' is examined, along with its interpretation in the legislative framework and by domestic and foreign scholars. A set of reasons that cause a borrower to default on their obligations is structured. It has been proven that considering the strengths and weaknesses of problem debt management methods is a key factor in selecting the best approach for a specific loan agreement under which problem debt arises. Based on the analysis of indicators of the state and quality of lending processes in the banking system, trends in the volume, structure, and coverage of NPLs by reserves have been identified, as have the most problematic banking institutions. A sequence of stages for managing problem debt on loans has been proposed, with the implementation of a monitoring and early response system for the emergence of problem credit debt already in the first two stages. This will allow for a timely response to deteriorating performance, determine the direction of work on the problem credit debt of each borrower-debtor, and promptly identify negative trends arising in the banking institution's operations in the credit market.