The Central Bank will not increase the number of foreign banks licensed to deal with local clients, the chairman of the State Duma's budget committee said Wednesday.


Mikhail Zadornov told an international banking conference the Central Bank would only allow those foreign banks licensed before November 1993 which had already started operating in Russia to deal with local clients.


The ruling was included in a new draft banking law to be submitted to the Duma -- the lower house of parliament -- for its second reading this month, he said.


Russia might decide to license additional foreign banks to handle domestic clients at a later date.


"Under a reciprocity approach, we have decided to act toward foreign banks the same way the United States and the European countries act toward our banks," he said.


Central Bank acting chairwoman Tatyana Paramonova said she was aware that decisions to let foreign banks operate freely in Russia could increase the readiness of Western states to loan money to Russia, but she added: "The scope of these operations has to be thought over because Russian banks are currently not in a position to withstand competition with them."


President Boris Yeltsin earlier this year cleared the way for foreign banks licensed in Russia to deal with local clients, partially scrapping restrictions he imposed in November 1993.


The bank said nine foreign banks are currently allowed to deal with Russian clients. They are Societe Generale, Credit Suisse, ING Bank, ABN-AMRO Bank, Bank of China, Yapi-Toko Bank, Russian-Turkish Bank, BNP-Dresdner Bank and Credit Lyonnais.


Yeltsin's decree technically excluded two U.S. banks already licensed in Russia -- Citibank and Chase Manhattan -- from dealing with Russian clients until the parliament ratifies a bilateral U.S.-Russia investment agreement. Citibank, however, has been serving Russian clients -- with the consent of the Central Bank -- on the premise that it opened its doors in Russia before the November 1993 restrictions were imposed.