Amended rules on mandatory reserves will be introduced as of 1 November 2009 | Practical Law

Amended rules on mandatory reserves will be introduced as of 1 November 2009 | Practical Law

This article is part of the PLC Global Finance September e-mail update for the Russian Federation.

Amended rules on mandatory reserves will be introduced as of 1 November 2009

Practical Law Legal Update 6-500-4995 (Approx. 3 pages)

Amended rules on mandatory reserves will be introduced as of 1 November 2009

by White & Case LLP
Russian Federation
This article is part of the PLC Global Finance September e-mail update for the Russian Federation.
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The Central Bank has adopted a new regulation on the rules regarding that mandatory reserves that must be held by credit organisations. The new regulation repeals its predecessor (passed in 2004) and the main differences are summarised here.
On 7 August 2009 the Central Bank adopted Regulation No. 342-P "On Mandatory Reserves of Credit Organizations." The Regulation will enter into force on 1 November 2009 and invalidate Regulation No. 255-P, dated 29 March 2004 on the same matter.
Regulation No. 342-P represents an amended version of the current Regulation No. 255-P, dated 29 March 2004.
Currently, Russian credit organisations are required to deposit certain reserve funds in non-interest bearing accounts with the Central Bank. The reserves are required for the credit organisation's:
  • Obligations to non-resident banks in rubles and foreign currencies.
  • Obligations to individuals in rubles
  • Other obligations in rubles and foreign currencies.
Regulation No. 342-P changes the above categories to requiring reserves for the credit organisation's:
  • Obligations to non-resident legal entities (including non-resident banks) in rubles and foreign currencies.
  • Obligations to individuals in rubles and foreign currencies
  • Other obligations in rubles and foreign currencies.
The Regulation also expands the list of obligations that do not require such reserves, including:
  • Obligations to an international financial organisation which is established based on an international agreement to which the Russian Federation is a party.
  • Obligations to the Deposit Insurance Agency and investors, not being credit organisations, incurred under Federal Law No. 175-FZ "On Additional Measures for Strengthening Stability of the Banking System within the Period until 31 December 2011," dated 27 October 2008 (this category of obligations is currently also exempt from the reservation requirement based on Central Bank Directive No. 2237-U, dated 22 May 2009, effective until 1 March 2010).
It also extends deadlines for submission of monthly reports on calculation of mandatory reserves by banks to respective Central Bank departments.