General director of the state Depositary Insurance Agency Alexander Turbanov
Photo: Pavel Smertin
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Banks May Do Away with Early Withdrawal
A new concept for legislation on public deposits not subject to early withdraw was unveiled yesterday by Deputy Chairman of the State Duma Banking Committee Anatoly Aksakov. Under the new concept, deposits of this type could be withdrawn before the stated time limit only under force majeure circumstances by court order. Aksakov said the draft law would be introduced into the Duma next week.
Under current legislation, a bank is required to return a depositor's money immediately on request, regardless of the conditions of the deposit agreement. The bank's funding is therefore never stable and it is unable to plan long-term uses of the funds it has attracted, forcing it to keep its funds in more liquid, less lucrative, instruments or else establish supplemental reserves.
Mikhail Sukhov, director of the department of licensing activities at the Central Bank, which supports the new concept, said that, should it become law, the Bank may consider liberalizing norms of bank liquidity. He pointed out that a higher interest rate could be offered on the new type of deposit. Alfa Bank senior economist Natalia Orlov opined that an increase of a single percentage point would be enough to attract interest in it.
In spite of a lengthy conciliate process, the Deposit Insurance Agency opposes the new rules and has proposed an alternative. The DIA holds that all deposits should be accessible within a certain time limit. A month was suggested. Bankers counter that mass withdrawals during time of crisis would not be possible. They support the new concept, “ especially if the Central Bank really does lower liquidity norms,” deputy chairman of Absolute Bank Oleg Skvortsov said.
www.kommersant.com
All the Article in Russian as of June 22, 2007
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