Bank of Russia Governor and the board of Association “Russia” discussed the development of competition in the banking sector
In her opening address, Elvira Nabiullina said that issues related to competition are as big a concern to the Bank of Russia as to credit institutions: ‘We believe that banking system development and providing support to efficient banks are only possible in a competitive environment’.
She added that the Bank of Russia's contribution to the promotion of competition takes the form of banking system rehabilitation measures as rivalry between unscrupulous banks and bona fide credit institutions deals the gravest blow to their competition.
E. Nabiullina also mentioned that another concern to bankers has always been fair competition between large and small banks.
‘We are launching a reform to identify several tiers within the banking system, including among banks with a basic licence. A corresponding law will come into force in 2018, and we are certain that it will help create workable business-models for small banks. We have adopted simplified regulation for banks with a basic licence and we are now considering the possibility of cutting the required reserve ratios for these banks’, she informed.
‘In collaboration with the banking community, we will monitor the implementation of the legislation on proportional regulation as soon as it becomes effective in 2018’, stressed Ms Nabiullina.
Speaking about competition between private and public banks, the Bank of Russia Governor emphasised that the regulator applies similar requirements both to private and public banks, noting that the government's stakeholdings in banks’ capital shall not interfere in the competition for the placement of government funds. ‘We have reached an understanding with the Ministry of Finance about the need for the extensive use of ratings in our decision-making when selecting banks where government funds will be deposited’.
The meeting participants also discussed the current cooperation between banks and the regulator, including the reduction of costs banks face related to checks and provision of information, and the adoption of electronic document workflow.
Elvira Nabiullina specifically underlined the importance of feedback in the relations between the regulator and banks: ‘We pay a great deal of attention to feedback and fully endorse the association’s proposal, i.e. to introduce actual impact assessment in addition to regulatory impact assessment. This will help to understand the way regulatory innovations shape banking business development’.