BoR Deposit Operations

As a monetary policy tool, central banks’ deposit operations imply that funds of credit institutions are placed on deposit accounts they open for a fixed term and at a fixed interest rate.

In the pursuit of their monetary policy, central banks may use deposit operations as follows. First, if necessary, central banks may resort to such operations to reduce the volume of excess bank liquidity, temporarily absorbing excess funds through deposit auctions. Second, central banks may offer deposit standing facilities to steer interest rates on transactions in the overnight segment of the interbank market. The Bank of Russia resorts to deposit operations in both cases.

The Bank of Russia holds deposit auctions to absorb excess liquidity. Regular one-week deposit auctions are the main liquidity management tool amid a structural liquidity surplus.

Deposit operations are conducted under Contracts for General Terms of Deposit Operations made between the Bank of Russia and credit institutions and the Rules of Bank of Russia Deposit Operations.

Deposit operations are carried out with Russian credit institutions in the currency of the Russian Federation. These are the only criteria credit institutions should meet to be admitted to deposit operations. 

The terms and conditions of all Bank of Russia deposit operations are as follows:

• transaction date,
• depositing date,
• deposit and interest repayment date,
• deposit maturity,
• interest rate.

If the credit institution does not place funds in a deposit following the results of the deposit auction or place funds in this deposit in a smaller amount, the Bank of Russia collects a fine (set to the size equal to zero) from the credit institution.

Interest on the amount of funds deposited with the Bank of Russia is accrued for each calendar day starting from the day following the depositing of funds to the day of deposit repayment inclusive. Interest is calculated using the simple interest formula.

The credit institution has the right to send to Bank of Russia an application for early repayment of a deposit placed with the Bank of Russia for a period of more than 1 day following the results of the deposit auction. In case of early repayment of the deposit (part of it), interest is accrued on the deposit amount returned ahead of schedule at an interest rate on overnight deposits applied on the day for which interest is accrued.

On the day of deposit repayment, the Bank of Russia transfers by a payment order the deposit amount and the accrued interest to the credit institution’s correspondent account.

Should the Bank of Russia refuse to deposit funds, they are repaid by a payment order to the credit institution’s correspondent account on the next business day with no interest accrued or repaid.