1. Measures to protect households
The Bank of Russia believes it important to expand credit institutions’ capabilities to restructure household loans and provide new loans to households, including mortgage loans. In so doing, it is necessary to minimise physical contacts between individuals and financial institutions. In view of this, the Bank of Russia has made the following decisions:
1.1. In order to facilitate the restructuring of household loans amid the spread of the new coronavirus infection, the Bank of Russia allows credit institutions not to categorise loans as restructured over the period from 1 March through 30 September 2020 for the purposes of applying risk-based buffers in the course of loan debt restructuring. This will make it possible for credit institutions to apply previous (lower) risk-based buffers for the specified cases irrespective of restructuring dates.
1.2. To improve the affordability of mortgage loans, the Bank of Russia plans to accelerate the implementation of Basel III standard1 in Russia with regard to retail lending. The provisions on the assessment of mortgage loan risks will be implemented by mid-2020. Risk ratios for standard mortgage loans with the LTV below 100% and eligible levels of the debt-to-income indicator will be set in the
1.3. The Bank of Russia recommends that credit and microfinance institutions, consumer credit cooperatives, agricultural consumer credit cooperatives, housing savings cooperatives (hereinafter, the creditors) suspend until 30 September 2020 any forced evictions of debtors (former owners and their cohabitants) from residential properties which have been foreclosed by creditors.
1.4. The Bank of Russia recommends that creditors, while attempting to recover outstanding debt, refrain from meeting with debtors in person during the period of restrictive measures in effect in such debtors’ localities.
1.5. The Bank of Russia recommends that credit institutions during the period until 1 July 2020 ensure that individuals conduct bank card operations even after the expiry of their bank cards.
2. Measures to support SME lending
A part of small and medium-sized enterprises (SMEs) raise bank loans under finance agreements against the assignment of receivables (factoring agreements). To expand the coverage of SME support programmes, the Bank of Russia will amend the framework for granting concessional loans to credit institutions by supplementing it with factoring agreements. It is also important to improve the eligibility of SMEs to receive lending remotely. In view of this, the Bank of Russia has made the following decisions:
2.1. The calculation of credit institutions’ debt limit under Bank of Russia loans, apart from SME loans, will include credit institutions’ claims to SME debtors arising out of their factoring agreements. This measure will stimulate credit institutions to expand the use of factoring in the SME segment, which is becoming especially relevant in the current situation.
2.2. From 6 April to 1 July 2020, the Bank of Russia will not apply sanctions against credit institutions for their failure to comply with the requirements, whereby they must not open bank accounts to individual entrepreneurs or legal entities, categorised as SMEs, in the absence of a person wishing to open such account or his/her representative, provided that the specified person wants to open this account to receive an emergency loan to support and retain employment (to cover expenses on wages and related mandatory charges).
3. Measures to support the banking sector’s capacity to credit the economy
3.1. Amid a massive decline in demand caused by the pandemic, restructuring is required not only by enterprises of the most affected industries, but also by a broader range of businesses. In cases when borrowers’ financial standing or the quality of debt servicing deteriorate due to the spread of the new coronavirus infection, the Bank of Russia allows banks during the period through 30 September 2020 to use the assessment of financial standing, and/or debt servicing quality, and/or a loan quality category, determined as of 1 March 2020. This decision shall apply to all types of activities not specified in previous decisions by the Bank of Russia. Moreover, provided that as of 1 March 2020 loans were classified not below quality category II.
3.2. In the majority of cases, restructuring procedure implies a suspension of payments, and a reduction in revenue for credit institutions. In this situation, banks accept a part of losses. To improve the banking system’s capabilities to restructure loans, the Bank of Russia will initiate the inclusion in the agenda of the next Board of Directors’ meeting of the Deposit Insurance Agency of the issue on the reduction of the base rate of insurance premiums from 0.15 to 0.1% until the end of 2020, and also on the reduction of the additional and higher additional rates of insurance premiums. The Bank of Russia will propose legislative amendments implying an accelerated enactment of decisions on the reduction of the base, additional and higher additional rates of contributions to the deposit insurance fund and the application of such rates for the calculation of insurance premiums from the date determined by the decision of the Board of Directors of the Deposit Insurance Agency.
4. Measures in the sphere of AML/CTF and foreign exchange control
The current epidemic situation changes conditions for business and the practice of services provision by financial institutions, thereby calling for the adjustments of the requirements for client identification and due diligence procedures, and also for the expansion of the possibilities of remote communication. In view of this, the Bank of Russia has made the following decisions:
4.1. The deadline for businesses and individual entrepreneurs to pay certain types of taxes, make advance payments related to taxes and insurance premiums which influence the estimated amount of the tax burden used by credit institutions to manage money laundering and terrorist financing risks was extended for a period of 3 to 6 months. In this connection, the Bank of Russia allows credit institutions to adjust the debt to income ratio for 2020 Q1-Q3 from 0.9 to 0.5% with regard to their clients operating in the spheres most affected by the coronavirus spread. The list of such industries was approved by the Government of the Russian Federation.
4.2. The Bank of Russia will not apply measures stipulated by Article 74 of the Federal Law ‘On the Central Bank of the Russian Federation (Bank of Russia)’ if authorised banks violate the deadlines set for submitting information to the foreign exchange control agencies in the period from 30 March to 1 July 2020.
4.3. The Bank of Russia allows credit institutions not take into account the period from 30 March through 1 July 2020 when calculating the deadlines for residents to submit certificates of confirming documents, as well as documents on foreign exchange operations. Should residents fail to submit or delay the submission of the certificates of confirming documents, as well as documents on foreign exchange operations in the period from 30 March through 1 July 2020, authorised banks shall forward to the foreign exchange control agencies the information on the violations of deadlines for submitting the above listed documents, if residents fail to submit such documents within 15 business days following the period from 30 March through 1 July 2020.
1 Basel III: Finalising post-crisis reforms.
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