Bank of Russia Announce Decrease of Credit Risks Limits for Crediting Organizations

On March, 19 the Bank of Russia announced that starting with May, 1st the limits for credit risk, established for crediting organizations for blank credits provision will be lowered.

In other words, the Bank of Russia will decrease the maximum rate of such credits which it will give to crediting organizations. This step is aimed at gradual contraction of anti-crisis measures of support of the banking sector.

It should be noted that the economic situation in the country stabilizing the debt of crediting organization for blank credits has already lowered from approximately RUR 2 trillions at the beginning of 2009 to RUR 75 billion in March 2010. The majority of crediting organizations tried to return the blank credits they had due to their high cost and the possibility to attract market financing under better terms and conditions.

Thus, it can be assumed that the biggest part of the outstanding debt remain in the banks that are still in difficult financial position. Taking into account the policy of the RF Central Bank for consolidation in the Russian banking sector the adopted measure will contribute into inefficient banks leaving the market.

Trunin P.V. – PhD, Head of Department of Monetary Policy