The Central Bank said Monday that it would tighten the rules for collateral-free lending, as part of an earlier-announced move to reduce the use of such loans now that the banking system is looking healthier.
“We have made the rules more strict, by reducing the limits [on how much can be borrowed] by each group of banks and by correcting the [minimum required] rating level,” Central Bank First Deputy Chairman Alexei Ulyukayev said.
The new rules will be effective from Feb. 1, 2010, the Central Bank said in a statement. Some 70 domestic banks will no longer be eligible for collateral-free loans as a result of the decision, Ulyukayev estimated.
On the ratings front, only requirements for ratings by three of Russia’s domestic ratings agencies are affected, while rules for international agencies’ credit ratings
remain unchanged.
The Central Bank expects the enforcement of the new rules to coincide with a forecast increase in general level of liquidity in the banking sector and an improvement on the money market.
“That is why it will not have an unfavorable influence on the functioning of the financial sector,” it said.
Last week, the Central Bank said domestic banks repaid nearly 650 million rubles ($22.67 million) of collateral-free loans ahead of schedule in the third quarter.
The Central Bank said outstanding loans as of Nov. 11 stood at 229 million rubles, down from 1.92 billion in February.
On Monday, the demand for the collateral-free loans remained relatively high, with the Central Bank lending all of the available 5 billion rubles in three-month loans.