Bank of Russia to introduce additional lending incentives and postpone some regulatory innovations

The Bank of Russia will implement the following additional measures to support credit institutions, including to encourage lending:

• The Bank of Russia will raise the amount of loans to small and medium-sized enterprises (SMEs) from 10 to 50 million rubles where banks can measure credit risk based on their in-house indicators of SMEs’ creditworthiness without using official reporting and assessing a borrower’s financial position. This will help reduce the number of procedures performed by banks and make it simpler to issue such loans.
• For loans issued under government subsidised lending programmes,¹ the Bank of Russia plans to decrease the risk weight for working capital loans issued to systemically important companies (for quality category I and quality category II loans, provided that interest is paid monthly and the principal is repaid on a quarterly basis):
  • to 20% for the part secured by guarantees of State Development Corporation VEB.RF; and
  • to 85% for the part not secured by VEB.RF guarantees for non-investment grade borrowers and to 65% for investment grade borrowers (this level will also be applicable when a bank uses not the finalised, but the standard approach).²

This incentive is planned to stay effective for one year since the issue of a loan and cover loans disbursed through 31 December 2022.

As it may take some time to receive VEB.RF guarantees, in order to speed up the process for issuing such loans, a reduced risk weight of 50% will be applied during the first three months after the issue of a loan.

Additionally, for the period through 31 December 2022, the Bank of Russia will not enforce³ compliance with the maximum risk ratio per borrower or group of related borrowers (N6) and the maximum risk ratio per borrower or group of related borrowers of a banking group (N21) in relation to claims in foreign currencies on Central Counterparty National Clearing Centre (CCP NCC) and National Settlement Depository (NSD) as regards incomplete settlements associated with delays in money transfers by non-resident counterparties, including international settlement centres, amid the restrictions imposed.

The Bank of Russia will introduce respective relaxations in the near future.

Furthermore, the Bank of Russia has decided to postpone the implementation of a range of regulatory innovations scheduled for 2022, namely:

• the implementation of the major risk concentration ratio per counterparty (group of related counterparties) (N30);
• the mandatory transition by banks with a universal licence to the finalised approach to assessing credit risk when calculating required ratios;
• the implementation of the concept for regulating immobilised assets, including the requirements for compliance with a risk-sensitive limit; and
• the introduction of differentiated buffers to the capital adequacy ratios of systemically important credit institutions.

This will make it easier for banks to adjust to the existing economic situation and reduce operating costs related to compliance with the innovations. As the situation returns to normal, the Bank of Russia will estimate when and to what extent it is reasonable to implement such regulation.

The reference to the Press Service is mandatory if you intend to use this material.

31.03.2022 17.43.20