SME lending support expanded to include OFZ-backed loans

The Bank of Russia has revised the liquidity providing mechanism to support lending to small and medium-sized enterprises (SMEs) — it will now comprise loans backed by federal government bonds (OFZs). Earlier, the mechanism encompassed only loans secured by sureties from JSC Russian Small and Medium Business Corporation.

This measure will expand the opportunities for banks to participate in the SME Lending Support Programme (hereinafter, the Programme) implemented by JSC Russian Small and Medium Business Corporation. OFZ-backed loans will be issued on the same terms and conditions as loans secured by sureties from JSC Russian Small and Medium Business Corporation. The interest rate on such transactions will be equal to the Bank of Russia key rate reduced by 1.5 percentage points. The longest maturity may not exceed three years (1,095 days). OFZ-backed loans will be included in the aggregate limit set for the SME lending support mechanisms totalling ₽288.3 billion. In addition, the Bank of Russia will establish an overall sublimit of ₽230 billion within the Programme for systemically important credit institutions.

The Bank of Russia will set individual limits on such loans for credit institutions based on the information from JSC Russian Small and Medium Business Corporation on outstanding loans to the borrowers eligible to participate in the Programme.

The procedure for issuing these loans will be similar to the one stipulated for standing Lombard loans within the Terms and Conditions for the Issue and Repayment of Bank of Russia Loans Backed by Securities or Credit Claims. Besides, OFZ-backed loans may be repaid ahead of schedule at the initiative of both a credit institution or the Bank of Russia.

Credit institutions wishing to raise OFZ-backed loans will need to sign a separate agreement. The information required for signing such an agreement, including its form, will be available on the Bank of Russia website.

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