Law On Control Over State-Supported Banks Comes Into Force

Wednesday, 31 December, 2008

The law introducing additional control measures over banks receiving state support has come into effect today. The document has been published in the Rossiiskaya Gazeta newspaper. Amendments to Articles 46 and 76 of the law 'On the Central Bank of Russia' allow the Central Bank to appoint its representatives to the banks that received government-sponsored loans, including subordinated loans from Vnesheconom bank and the Central Bank in accordance with the law 'On Additional Measures to Support the Financial System of the Russian Federation', as well as unsecured loans from the Central Bank under the law 'On the Central Bank of Russia', and also to the banks where temporarily idle budget funds have been deposited in accordance with the Budget Code of Russia. The law will not apply to the banks that received short-term unsecured loans from the Central Bank (up to one month).

The amendments allow the Central Bank's representatives to take part in the meetings of the banks' management bodies, as well as the bodies responsible for lending and asset management issues. The document also contains the list of issues on which the credit organizations shall report to the Central Bank. It was passed by the State Duma on December 24, approved by the Federation Council on December 29, and signed by President Dmitry Medvedev on December 30.

Source: http://www.rbcnews.com/