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Banking regulation: 2021 development plans

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The Bank of Russia will continue to enhance banking regulation in 2021 to adjust it so that banks are able to make their risk assessments even more accurate, as well as to promote lending to the economy. The Bank of Russia is going to:

  • Continue to implement the Basel III standardised approach to measuring credit risk on unsecured retail loans (including credit cards), which may help release additional capital to expand lending.
  • Improve approaches to assessing risks on loans granted to support lending to small and medium-sized businesses, housing construction and mortgage lending, as well as to maintain banks’ potential to extend loans to the economy amid the spread of the coronavirus. The earlier announced amendments to the regulation aimed at limiting lending for mergers and acquisitions are to become effective on 1 October 2021.
  • Lower the threshold amount of assets for banks to voluntarily apply the internal ratings-based (IRB) approach from 500 billion rubles to 150 billion rubles. These amendments will enable a larger number of banks to switch to a more advanced approach to measuring capital adequacy and provisioning.
  • Continue to develop the framework for the mandatory migration of systemically important banks to the IRB approach. The related consultation paper detailing an outlook of this process may be released in 2021. The Bank of Russia is also going to resume the exploration of the issue regarding differentiated capital adequacy buffers for systemically important banks and the introduction for them of the N30 ratio — the maximum concentration of major credit risks.
  • Continue preparations for the implementation of new approaches to measuring interest rate risk in the banking book and market risk, including foreign exchange risk, in accordance with international standards.
  • Launch a new approach to measuring the operational risk size included in capital adequacy ratios, which will enable banks to apply the loss ratio for calculating capital needed to cover operational risk based on the actual level of direct losses caused by operational risk events.
  • Bring into effect (in October 2021) a new method for measuring credit risk on financial derivatives according to the new Basel III standardised approach to calculating required ratios for banks with a universal licence.
  • Continue efforts aimed at enhancing the transparency of credit institutions’ and banking groups’ operations. 1 October 2021 is planned to be the effective date of new requirements for disclosing information on measuring interest rate risk in the banking book and on assessing credit and operational risks pursuant to the new Basel III standardised approach.
  • Bring into effect in 2021 Q1 amendments simplifying the procedure for the disclosure by credit institutions of information on interest rates under bank deposit agreements with individuals. Banks will calculate maximum return on deposits according to new rules requiring them to calculate this indicator taking into account all conditions for depositors’ increased income.

The Bank of Russia will also continue to improve the regulation of the operation of banks with a basic licence.

This news item was originally published by the Central Bank of the Russian Federation (CBR RU). For more information, see the Source Link.

Regulator Information

Abbreviation: CBR
Jurisdiction: Russian Federation

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