Raising of Credit Rates is Supported by Russian Government
The bill introduced to State Duma, which forbids banks to ratchet upward interest rates for already granted credits, Russian government found non-market one. Currently financial institution has a right to change cost of loan if it is prescribed in bank’s agreement with borrower. Amendments to the law “On banks and banking activity”, introduced to State Duma by the group of deputies in December, 2008, deny financial institution this opportunity. The document extends to credit agreements with individuals.
Necessity of passing the bill deputies explained that in the peak of
crisis banks began to change unilaterally credit conditions for their
But Russian government asks to recall the bill, calling its provisions non-market and supposing that adoption of this law may result to departure of foreign banks from Russia. The Ministry of Economic Development and Trade supported negative response of Ministry of Finance to this bill. The reason is that adoption of the law may increase the risks of banks and limit their activity in case of force majeure.
Deputies are not going to recall the bill. They are going to mitigate provisions of the document.