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Ministry backs Russian Central Bank’s proposal to set up fund for rehabilitation of banks

August 22, 14:51 UTC+3 KAZAN
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KAZAN, August 22. /TASS/ Russia’s Economic Development Ministry supports the proposal of the Central Bank on creation of the fund for rehabilitation of troubled banks, Deputy Economic Development Minister Nikolai Podguzov told TASS.

"We have received the draft law and the relevant proposal from the Central Bank. Together with the Finance Ministry we have supported it as a concept but it is necessary to discuss the details of the concept and the law itself in order to see how this proposal will match the current system of bank’s rehabilitation, where the Deposit Insurance Agency has accumulated considerable experience," Podguzov said.

Earlier it was reported that the Central Bank plans to create a special banking sector consolidation foundation. The funds of this foundation will enter the capital of the rehabilitated banks.

By autumn the regulator plans to submit amendments to the legislation that will make it possible to create such a fund to the State Duma, lower house of parliament.

The Central Bank is expected to set up a management company to manage the fund.

The Central Bank will transfer its funds to the foundation, which will send them to the capitals of troubled banks.

Currently, a different mechanism for rehabilitation of banks is used - the Central Bank sends funds to the Deposit Insurance Agency which grants them to troubled banks in the form of loans.

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