The federal government makes further changes to the Law on the Central Bank as financial crisis continues | Practical Law

The federal government makes further changes to the Law on the Central Bank as financial crisis continues | Practical Law

The federal government makes further changes to the Law on the Central Bank as financial crisis continues

The federal government makes further changes to the Law on the Central Bank as financial crisis continues

by White & Case LLP
Published on 04 Feb 2009 • Russian Federation
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The Law on the Central Bank has been amended further to extend the time period during which it can grant unsecured loans to eligible credit organisations. It has also been given powers to monitor credit organisations who have received state aid under certain other recently adopted measures.
On 30 December 2008 the President signed Federal Law No. 317-FZ amending the Federal Law on the Central Bank. The Law entered into force on 31 December 2008.
Under the amendments, the Central Bank may grant unsecured loans to credit organisations for up to one year (as opposed to six months previously).
Further, the Central Bank may appoint its authorised representative to monitor credit organisations that received state support. These include, in particular, credit organisations that obtained:
  • Loans from the Bank for Development and Foreign Trade (VEB) under the October 2008 Federal Law No. 173 FZ (see New measures introduced to support the Russian financial system).
  • Unsecured loans from the Central Bank for more than one month, as well as credit organisations that were affected by bankruptcy prevention measures under the October 2008 Federal Law No. 175-FZ (see Temporary measures are introduced to strengthen the banking system until the end of 2011).
The Central Bank's representative is authorised to attend meetings of the management bodies of the credit organisation and obtain certain information and documents (such as those relating to its lending activities). In addition, the credit organisation is obliged to notify the Central Bank's authorised representative about its intent to make certain transactions (for example, obtaining or granting loans and transfers to foreign banks if they exceed 1% of the credit organisation's balance sheet assets).
A credit organisation's failure to comply with the specified requirements may result in the imposition of sanctions on it and the acceleration of claims against it under the respective agreements.