| The State Duma on Wednesday approved in the first reading
a bill on banking deposit insurance, a critical move in restoring the trust
of millions of Russians in the private banking system.
The law designed to protect private depositors against loss if their
bank goes bankrupt, is widely seen as a central part of banking sector
reform needed to create a competitive environment for private and state-run
banks.
The bill is expected to reduce the dominance of state savings bank Sberbank,
which alone enjoys state guarantees for household deposits, and empower
the Central Bank to screen other banks before taking them under the insurance
umbrella.
Analysts said the bill offered a good pretext to clean up a fragmented
and undercapitalized sector, which has bad performers, and the government
said it would insist that legislation be passed this year.
"The government intends to press for the law to be adopted in all
of the three readings this year," Deputy Economic Development and
Trade Minister Arkady Dvorkovich told reporters ahead of the vote.
But earlier this week pro-Kremlin deputies said that because of conflicting
interests final passage of the bill could stall until after the December
elections. The law has received a cool response from some private banks,
which would rather avoid Central Bank scrutiny.
Sberbank, which accounts for about 65 percent of household deposits,
is also reluctant to contribute to the cost of guarantees it currently
enjoys for free.
Mikhail Zadornov,
deputy head of the Duma's budget committee, proposed to amend the bill,
saying the state should maintain its full guarantees to Sberbank depositors
and separate insurance funds for state and commercial banks. The government
wants to keep its guarantees to Sberbank until 2004.
Economists say faster progress in banking reform is vital given explosive
growth in lending as weak foundations of the 1,300 bank-strong sector
might make it vulnerable to a collapse in oil prices or political instability.
See also:
Banking
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