The Bank of Russia announced on Apr. 9 draft amendments aimed at preventing banks from bypassing macroprudential add-ons through investments in bonds backed by consumer loan payments, excluding mortgages. The proposed changes are detailed in amendments to Bank of Russia Ordinance No. 6960-U, dated Dec. 16, 2024.
The regulator said the move addresses recent trends where banks have been actively issuing and purchasing bonds secured by retail loan payments. Since these securities are currently exempt from macroprudential add-ons, banks may exchange loan portfolios and reduce their capital requirements for loans, effectively sidestepping intended regulatory burdens.
To close this loophole, the Bank of Russia is updating procedures for applying add-ons to such instruments. Additionally, the draft includes proposals to ease some requirements for banks. For example, loans issued for newly completed residential buildings could shift from higher to lower macroprudential add-ons typically applied to finished housing rather than waiting a year after completion. For single-family home construction loans, it is proposed that add-on values be based solely on borrowers’ debt service-to-income ratios.
Further amendments would reduce the minimum share of foreign currency revenues required for companies to be classified as exporters from 40% to 30%. This change reflects an ongoing transition toward ruble-based settlements in foreign trade and aims to more accurately identify exporters if future regulations introduce specific add-ons related to foreign currency loans or corporate bonds.
Public comments on these draft amendments are invited between Apr. 9 and Apr. 22, with the updated ordinance set to take effect one month after official publication.
According to the official website, the Bank of Russia documented cash in circulation reaching 18.6 trillion rubles as part of its currency management efforts and serves as the sole issuer of the Russian ruble while managing national cash circulation. The institution operates as a legally independent entity with federal property and exercises monetary authority independently from other government bodies according to its official website. Its stated goals include promoting financial and price stability while fostering a competitive financial market according to its official website. Leadership comprises a governor and deputy governors alongside specialized departments according to its official website. The bank also publishes various documents such as annual reports and financial analyses for public access according to its official website.
