An agreement for a loan is a monetary gift that is repaid by one party to another over a specified period of time, typically for interest. BoR Secured Loans
Various reasons can lead to central banks extending loans. Liquidity is controlled and interest rates on the short-term money market are steered by loans as a monetary policy tool. It may also be necessary to grant loans in order to facilitate smoother payment system operation. Provide temporary liquidity assistance to credit institutions in hardship, and restore or maintain the stability of the financial system.
BoR Secured Loans
Secured loans are part of the Bank of Russia’s monetary policy framework, but are also used for other purposes. Both auctions and standing lending facilities are currently available to the Bank of Russia as standard monetary policy operations.
In order to manage total liquidity in the banking sector, the Bank of Russia conducts loan auctions. In cases of structural liquidity deficits, including when credit institutions lack marketable collateral. The Bank of Russia reverts to these operations.
Depending on the type of loan, credit institutions can use the standing lending facilities of the Bank of Russia on any business day – intraday loans, overnight loans, Lombard loans, and credit claims secured loans.
BoR Secured Loans
As well as lending for bank liquidity management, overnight money market interest rate steering, and monetary policy overall. The Bank of Russia makes secured loans for other purposes.
Certain sectors of the economy or industries that are hampered by structural factors can benefit from special refinancing facilities. The Bank of Russia has proposed the following facilities:
- EXIAR’s insurance contracts are used to secure loans obtained by the Bank of Russia;
- A loan from the Bank of Russia secured by a credit claim against a credit institution, microfinance organization, or leasing company issued by JSC SME Bank;
- Loans from the Bank of Russia are guaranteed by a guarantee from the JSC Russian Small and Medium Enterprise Corporation.
- Bank of Russia loans is secured by loans from leasing companies.
Bank of Russia loans is secured by credit receivables under-investment project contracts. - Russia’s loans is collateralized by bonds issued to finance investment projects and are included in the Bank of Russia’s Lombard List.
- Bank of Russia loans is secured by mortgages issued under the military mortgage program.
- The relevant interest rates for the Special Refinancing Facility are set out in the Bank of Russia’s Special Refinancing Facility Interest Rates section.
BoR Secured Loans
From 1 September 2017, the Bank of Russia will also provide loans under the Emergency Liquidity Assistance Mechanism (ELA). The mechanism can be used by banks facing temporary liquidity shortages when other sources of credit, including the Bank of Russia’s monetary policy tools, dry up. Funding under the ELA is in rubles for a maximum period of 90 days. In this case, the interest rate corresponds to the primary interest rate increased by 1.75 percentage points at the time the loan was granted.
These loans offer a wider range of eligible collateral than loans granted under the monetary policy framework. To support the efforts of systemically important financial institutions to comply with their liquidity coverage ratios, the Bank of Russia has established credit lines under irrevocable lines of credit. This facility provides credit at his base interest rate plus 1.75% under an irrevocable line of the credit agreement.
In 2014-2016, the Bank of Russia maintained financial stability and provided financial institutions with access to dollar liquidity in the event that access to dollar liquidity was restricted for reasons beyond the control of the credit institutions. provided foreign currency loans to provide Loans that were approved for 28-day and 365-day credit claims (in USD).
Operational Overview
The following sections only deal with credit granted under normal monetary policy instruments.
Applicable Documents
Secure loans are issue in accordance with the Regulations of the Bank of Russia Ordinance. The terms of the bank’s loan issuance and repayment. Secured by Russian securities or credit.
In order for the transaction to be carrie out in accordance with the terms of the transaction. The credit institution shall formally contact the competent department of the Bank of Russia. To obtain an agreement on participation in the transaction on the issuance and redemption of the Bank of Russia. I have to. Russia enters into loans secure by securities or credit claims.
Counterparties and criteria for access to secured loans from Russian banks
Secured loans are issue only to Russian financial institutions. The Bank of Russia does not specify any other criteria for concluding a loan participation agreement. However, the Bank of Russia will only lend if the borrowing rights of the financial institution have not been suspending. The financial institution meets the following two criteria specified in the regulations:
The financial institution is include in classification group 1 or 2 taking into account the assessment of the economic situation.
This financial institution has no overdue debts to the Bank of Russia, including overdue loans from the Bank of Russia and interest on such loans.
Document Exchange Procedures
The Bank of Russia has drawn up a list of documents that financial institutions must submit electronically. These documents may be present to the Bank of Russia in paper form only if it is technically impossible to transmit them electronically.
Currently, financial institutions participating in lending operations can only send documents to the Bank of Russia electronically. The agreement on electronic messages relates to the movement of funds within the payment system of the Bank of Russia.
The Bank of Russia has set the departments authorized to receive these documents and the deadlines for their receipt.
Credit institutions can submit documents for obtaining credit other than those mentioned above, both in paper form and on paper (however, credit institutions can submit documents and the Bank of Russia can submit documents). (if you can receive it electronically). BoR Secured Loans
Loan Accounts
Secured loans, including intraday and overnight loans, can be transfer to correspondent accounts maintaine by any department of the Bank of Russia. A list of such accounts is specifie in the Loan Participation Agreement.
A financial institution may initiate an amendment of the list of major customers by requesting the Bank of Russia to amend the Loan Participation Agreement, following the procedure set forth in Chapter 6 of the Terms and Conditions. In the cases specified in the chapter above, the Bank of Russia may, at its discretion, exclude individual large customers from the Loan Participation Agreement. BoR Secured Loans
Interest on loans
No interest on intraday loans from the Bank of Russia. Also, there is no service charge. Interest on other loans accrues on each calendar day from the day after the loan is issue until actual repayment. Interest is calculate using the simple interest formula.
Relevant information regarding interest rates for all types of secure loans from the Bank of Russia. The lowest acceptable bid rates can be found in the interest rates section. Repayment of the loan and payment of interest on the basis of the collection order of the Bank of Russia, by debiting. The correspondent account of the financial institution to which the respective loan was transfer.
Bank of Russia may demand early repayment of the loan if there are reasons according to Chapter 23 of the Terms and Conditions. The financial institution may, at its discretion, arrange early repayment of the loan. In order to repay the loan on time at its sole discretion, the financial institution must notify the Bank of Russia of its intentions according to the procedure set out in Chapter 22 of the Terms and Conditions. BoR Secured Loans