New instruction on supervisory measures applied to credit institutions comes into effect

A new Bank of Russia regulation has been officially published. It determines supervisory measures applied to credit institutions (a parent credit institution of a banking group): requirements to remedy revealed violations, fines and restrictions (bans) on certain operations and reasons for supervisory measures. Instruction No. 188-I becomes effective 10 days after publication and replaces Bank of Russia Instruction No. 59, dated 31 March 1997, ‘On Application of Corrective Measures Against Credit Institutions’.

The Bank of Russia makes a decision on application of supervisory measures taking into account the nature of a violation, its reasons and an effect on the credit institution’s economic standing. When applying supervisory measures, the Bank of Russia will take into account the credit institution’s position in federal and regional banking markets, the availability of an agreed plan of financial rehabilitation measures or a financial stability recovery plan, and the effect on uninterrupted operation of payment systems used by the bank.

Also, the Instruction determines situations when the Bank of Russia abstains from application of supervisory measures to the credit institution – if the credit institution fails to meet the requirements of Bank of Russia documents other than regulations or instructions, and if the violation was committed by the credit institution more than five years ago.

The document also provides for electronic issue of instructions.

The decision-making authority on application of supervisory measures to credit institutions is shared by the heads of Bank of Russia divisions and Bank of Russia Deputy Governors in charge of the business lines of institutions supervised by the Bank of Russia.