Bank of Russia improves approaches to provisioning by credit institutions
Banks will be able to use risk-sensitive ratios to make provisions for contingent credit obligations, such as credit lines and bank guarantees. The value of the ratios will be based on the rate of conversion of these obligations to credit claims.
Lowering the conversion ratios (which currently stand at 100%) will reduce pressure on banks’ capital and make off-balance sheet products more affordable for customers.
The threshold value of claims on small and medium-sized enterprises (SMEs) will also be raised from ₽10 million to ₽50 million, if the exposure to such claims can be assessed on the basis of banks’ own indicators of creditworthiness without using official reports or assessing the borrower’s financial position. This will help reduce the operational burden on banks and boost lending to SMEs.
The Bank of Russia’s corresponding ordinance will take effect on 23 October 2023.