10 April 2004 01:47
74 banks apply for deposit insurance system
MOSCOW. March 24 (Interfax) - Applications to join the deposit insurance system had been received by 74 banks as of
March 23, including 33 Moscow banks, Central Bank of Russia First Deputy Chairman Andrei Kozlov told the press
Wednesday.
The Central Bank completed a draft package of documents concerning the system in March, including a draft law on
insuring deposits and instructions on regulations for banks, on loan reserves and on requirements for banks that issue
mortgage bonds.
"The plan for the first quarter has been met and banks are aware of all the rules for joining the deposit
insurance system," Kozlov said. Some changes could still be made, but the main body of work has been completed, he
said.
The new instruction on creating reserves for the possible loss of loans has seen various important changes. For
example, it now has a more formal and clear cut approach to evaluating a borrower's finances. At the same time, the
creditor has more freedom in selecting documents and facts for evaluating a borrower's creditworthiness. The
document also contains criteria for loan quality. The loan security has been transferred from a key loan guarantee
factor to an optional or additional guarantee factor.
Banks will have the right to independently determine the level of risk and form reserves based on this, Kozlov
said.
After the new instructions come into force, these banks will have to
create a large volume of reserves and some have already done so under
The Central Bank has the right to review a bank's decision on a loan, providing the appropriate evidence.
"This is a new element in our mutual relations culture," he said.
The new instructions contain strict restrictions on relating loans to certain categories. This aims to avoid
different ways of tampering with reports. Honest banks will not have any problems with the restrictions, but there will
be trouble for those used to inflating capital.
In drawing up its instructions, the Central Bank tested them on the reports of about ten violators to see what impact
they would have, he said.
pressure from the Central Bank.
The Central Bank board approved the new instruction on loan reserves on March 19. Kozlov said earlier that the
instructions would come into force on August 1 2004.
[Interfax] |
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