Required reserves of commercial banks– funds of credit institutions, which they must keep as a mandatory reserve in a correspondent account with central banks. The mandatory reserve system is being introduced to ensure the obligations of banks on placed deposits, as well as to regulate the volume money supply in circulation.
See what “Required reserves of commercial banks” are in other dictionaries:
Required reserves of banks- funds of commercial banks and other credit institutions, which they are required to keep at the central bank as security for some of their operations in accordance with the norms of required reserves. Required reserves represent... ... Financial Dictionary
REQUIRED RESERVES OF BANKS- funds of commercial banks and other credit institutions, which they are obliged to keep in the central bank as security for some of their operations in accordance with the norms of required reserves. The size and structure of such reserves... ... Encyclopedic Dictionary of Economics and Law
Required reserves of banks- funds of commercial banks and other credit institutions, which they are obliged to keep in the central bank as security for some of their operations in accordance with the norms of required reserves ... Terminological dictionary librarian on socio-economic topics
COLLECTION OF AMOUNTS OF UNDERPAYMENT OF REQUIRED RESERVES FROM COMMERCIAL BANKS- collection by a territorial institution (cash settlement center) of the Bank of Russia sums of money from commercial banks, which are used to replenish required reserves, and fines for violation of the reservation procedure, starting from the third... ... Great Accounting Dictionary
RESERVES MANDATORY Economic dictionary
BANK REQUIREMENTS RESERVES- funds of commercial banks and other credit institutions, which they are required to keep at the central bank as security for some of their operations in accordance with the norms of required reserves. The size and structure of mandatory... ... Economic dictionary
bank reserves (mandatory)- funds of commercial banks and other credit institutions, which they are required to keep at the central bank as security for some of their operations in accordance with the norms of required reserves. The size and structure of mandatory... ... Dictionary of economic terms
Required reserves of commercial banks– funds of credit institutions, which they must keep as a mandatory reserve in a correspondent account with central banks. The mandatory reserve system is being introduced to ensure the obligations of banks on placed deposits, as well as to regulate the volume of money supply in circulation.
Secondly, banking system in general (but not just one bank) creates non-cash money using the so-called bank multiplier. With mandatory reserves, regulatory authorities are able to control this process and the amount of money in circulation. Thus, reserve requirements are used as a monetary policy tool.
In Russia, the mandatory reserve standard for financial organizations, according to Federal Law No. 86-FZ of July 10, 2002 “On the Central Bank of the Russian Federation (Bank of Russia)”, is determined by the Central Bank.
The obligation to deposit funds arises for all credit institutions from the date of obtaining a license. Contributions are made in non-cash rubles, interest on required reserves is not paid, and these amounts cannot be levied. In the event of bank liquidation, the reserved funds are transferred to the liquidation commission.
At the same time, the following types of bank obligations to clients are exempt from reserving:
Funds raised from legal entities for a period of at least 3 years;
Liabilities to other credit institutions.
The amount of required reserves is determined by the Board of Directors of the Central Bank and published in the Bulletin of the Bank of Russia. At the same time, the Central Bank for a certain category of credit institutions grants the right to use the mechanism for averaging required reserves. That is, for large banks it is taken into account average amounts Money, on which the reserve should be deposited, for the previous month.
In addition, the Board of Directors determines two coefficients, each of which can take a value from 0 to 1.
An adjustment factor that reduces the amount of the reserve for debt securities issued by a credit institution.
An averaging coefficient that determines the portion of the reserve that the bank cannot dispose of. In this case, the total amount of the reserve must be observed on average per month.
For the summer of 2011, the following reserve standards are in effect: for obligations to foreign legal entities– 5.5%, to Russian individuals and for other obligations – 4%.
The averaging coefficient for banks is 0.6, and for non-bank credit organizations - 1. The adjustment coefficient is 0.2. At the same time, the total volume of bank reserves in the Central Bank amounted to 341.6 billion rubles.
Why do banks refuse to issue loans to some clients?
What is the main one?
Why is a borrower’s credit history so important to banks?
Economics and banking experts talk about this.
What are reserves?
Viktor Orlov, Head of Department active-passive operations BANK ITB: “The main activity is attracting customer funds and placing funds in the form of loans and investments in other assets. Since when lending to borrowers there is a risk of non-repayment of loans, in order to protect the interests of depositors and bank clients, the Central Bank has introduced requirements for the need to form reserves in case of loan impairment.
The size of the reserve depends on the assessment of the likelihood of the borrower repaying the loan, and the more risky the borrower, the larger the reserve the bank must create. Also, the size of reserves allows us to manage the risk appetites of banks and prevent the creation of credit bubbles with unlimited lending.”
Igor Zadorin, head of the planning and analytical department of the Ring of the Urals bank, explains: “Reserves are funds that we set aside (reserve) in case the client does not repay the loan. Essentially, it’s something like an intra-bank “ insurance fund"(conditionally, naturally). If the client falls into default, we increase the amount of the reserved amount for the debtor. And if he doesn’t pay for more than 90 days in a row, we set aside 100% of the amount he still owes + % payments. When a bank decides to write off the debt of such a borrower, it must record a loss - it is the money that they lost. And this loss is compensated by previously created reserves for the client"
Boris Pivovar, senior lecturer at the Department of Economics and Finance, Faculty of Economic and Social Sciences, RANEPA, spoke in more detail about bank reserves: “Bank reserves are those funds that the bank leaves in special accounts in the event of any unusual situations.
There are required bank reserves - these are funds, or rather the percentage that commercial Bank is obliged to leave each deposit taken and deposit it into a special account of the Central Bank of the Russian Federation. This, firstly, is insurance in the event that an urgent return of funds from part of the depositors is required, and, secondly, it is one of the integral tools monetary policy. To explain with an example, the fictitious bank took 100 rubles as a deposit. The required reserve norm is conditionally 10%. It means that this bank is obliged to transfer 10 rubles (10% of 100 received on deposit) to a special account in the Central Bank of the Russian Federation. The bank can use the rest at its own discretion, namely to issue loans and so on. If this rate increases, it means that the bank can operate with a smaller amount of money, which will reduce the volume of lending in the country. And if there are fewer loans, then there will be less money in circulation, which could potentially slow down inflation, but also slows down lending to new projects, businesses, and other things. And vice versa, the lower the required reserve ratio, the more money becomes in the country, which increases the volume of investments in business (investments), but can accelerate inflation. That is why the Central Bank very carefully manages this required reserve ratio.”
"Far from financial market people the question arises: why is it necessary to oblige banks to create some reserve funds, if in default mortgage borrower Can a bank foreclose on a mortgaged apartment? The bank can impose a foreclosure, but an apartment is not a kitten that can be sold in half an hour at the metro. Selling an apartment takes from several months to several years: the more expensive the property, the more difficult it is to find a buyer. Therefore, the bank withdraws part of the funds from reserves to pay interest on deposits, expenses for renting buildings and premises, equipment, staff salaries, etc.” - adds Anastasia Kuznetsova, director of the legal department of the bureau luxury real estate"Must Have».
Dmitry Ovsyannikov - CEO company "MORTGAGE" RU": “They started talking seriously about the formation of reserves by banks in 1998, after the August crisis. This crisis was caused by the inability of banks to return deposits to the population. “How are deposits related to reserves?” - you ask. In the most direct way! I’ll try to explain what is called “on the fingers and in a simple way.” The fact is that the bank acts as a kind of financial intermediary: it takes money from some in the form of, for example, deposits, and gives money to others in the form of loans. By deposits - alone interest rates(lower), for loans - others (higher). The difference in rates allows banks to make money.
What happened in 1998? The bank took money from depositors, gave it to borrowers in the form of a loan, and the borrowers did not return the money. Consequently, the bank has no money to return to depositors.
A logical question to the bank from the Central Bank: “Who are you giving money to? We need to check the borrower! Why give money to those about whom you know in advance that they will not return it?” And it was decided that when a bank gives a loan, then, depending on how regularly the borrower pays, the bank should form reserves, placing them in the Central Bank account at a “ridiculous” percentage.
If the borrower pays regularly, there is no need to create reserves. If the borrower pays, allowing numerous delays, the bank must create a reserve. Sometimes the size of such a reserve may be equal to the balance of the borrower's debt to the bank.
What is the reserve for? So that if the borrower to whom the bank issued a loan stops paying altogether, so that the bank has money to pay off depositors. But this is what is called “in a simple way.” As a result, on March 26, 2004, Bank of Russia Regulation No. 254-P “On the procedure for credit institutions to form reserves for possible losses on loans, on loan and equivalent debt” was issued.”
How are bank reserves and the credit history of borrowers related?
Victor Orlov: “One of the tools for assessing the likelihood of a borrower repaying a loan is his credit history. Statistics show that the worse a client’s past credit history, the more likely it is that the borrower will default on loans in the future.”
Anastasia Kuznetsova: “Currently there are 25 officially registered on the market, which store credit history borrowers. The bank makes a decision to issue or not to issue a loan only after studying the borrower’s history. Every fifth loan refusal occurs precisely because of the borrower’s bad credit history. The connection between the volume of bank reserves and the credit history of borrowers is the most direct. The more clients there are at risk of loan default, the larger the reserve should be. Therefore, it is not profitable for banks to issue loans to borrowers with a problematic history, so as not to increase the amounts transferred to the reserve and not to worsen financial results.”
Boris Pivovar gives an example: “Conventionally, a person has either non-repayable loans in his credit history. The bank can give him a loan, but of course at a higher price high percent. But accordingly, it will leave reserves for such borrowers that are significantly larger than those established by the Central Bank. It’s like a person who is not sure that he will receive his salary on time, but he needs to buy food every month, and he needs to pay the rent. He can keep an extra supply, in addition to what he usually leaves, so that if an unpleasant situation arises (namely, the payment of wages), he can buy what he needs.
Banks' behavior in in this case no different. Banks simply use and operate with a large amount of information about borrowers, including credit history. This aspect is beautiful name“Risk management,” but by and large, is simply a way to predict and minimize possible losses from careless clients.”
Why do banks find fault with a borrower's credit history? Why is a damaged credit history the most common reason for loan refusals?
Dmitry Ovsyannikov: “In accordance with Bank of Russia Regulation N 254-P “On the procedure for the formation of reserves by credit institutions...”, the borrower’s loans belong to one of 5 quality categories.
The best quality category is standard loans. The worst quality category is bad loans (category V). (As the name implies, in the case of bad loans, the bank understands that they simply will not be returned to it).
When determining which quality category the borrower's loan belongs to, it is taken into account financial position borrower and debt service quality. Moreover, if the borrower has several loans (credits), then they belong to the same quality category, depending on which category the loan whose quality is the worst belongs to. Depending on the loan quality category, the bank either must form required reserves or not. Also, the size of the reserve for a specific loan or for a portfolio of similar loans depends on the loan category. Therefore, the bank must know the borrower’s credit history and whether the borrower has loans in order to correctly calculate the amount of required reserves.”
Victor Orlov: “Given the Central Bank’s tightening of requirements for the creation of reserves, the deterioration of the general solvency of the population and the increase in overdue loans, banks are forced to carry out a more balanced and, possibly, tough credit policy, which also led to an increase in loan refusals for borrowers with a bad credit history.”
Why is there almost no refinancing of foreign currency loans now, especially? (Is all this really due to Regulation 254-P and the need to create reserves?)
Dmitry Ovsyannikov: “The need to create reserves is only one of the reasons why banks refuse refinancing programs. Indeed, when refinancing, the borrower’s loan may be classified as a lower quality category, with the need to create a larger reserve for it. But there are two more main reasons why banks refuse to refinance.
The fact is that banks are trying to put any loan product on stream. This is important for creating a portfolio of homogeneous loans. Communicating with different banks, I hear the same arguments against refinancing. They say that for every 3,000 loans issued by a bank, there are about two dozen refinancings, and more than half of the refinancings were carried out by the employees of a particular bank themselves: they refinanced their own loans. That is, talk about refinancing as a massive credit product- it’s not necessary.
But the most common reason for banks refusing to refinance foreign currency loans is related to the “loan/collateral” ratio. Due to the increase in the exchange rate, it turned out that the size of the foreign currency borrower’s loan is slightly less than the value of the collateral, and in some cases even more. If we use numbers as an example, banks do not want to give a borrower a loan, for example, 5 million, secured by an apartment that costs three million.”
Victor Orlov: “Concerning the refinancing of foreign currency loans. During the period of maximum growth in exchange rates, borrowers were practically unable to refinance loans into rubles, due to the fact that banks offered such refinancing at current rates currencies Borrowers' proposals to fix rates at the time “before they rise” were difficult for banks to implement, since in this case the bank would experience a significant loss. IN Lately“, including due to the Central Bank providing banks with the opportunity to evenly attribute such a result of refinancing to losses, as well as due to the growth of the ruble, an increasing number of borrowers can transfer their foreign currency loans into ruble ones.”
So, we found out that it seems that the formation of reserves is a necessary and good thing, but on the other hand, the need to form reserves is one of the reasons why refinancing, especially foreign currency loans, does not work, and also the need to form reserves is one of reasons why banks refuse to issue loans to borrowers with damaged credit history.
Bank reserves are the funds of commercial banks and other credit institutions, which they are required to keep at the central bank as collateral for some of their operations in accordance with required reserve requirements.
In Russia, the Central Bank sets banks' required reserves as a percentage of the amount of funds raised. The highest are banks' required reserves on deposits individuals in foreign currency and rubles. Bank reserves sufficiently guarantee the return of deposits to the population. In addition, banks' required reserves play a stabilizing role in difficult economic circumstances.
Primary reserves are assets in cash held in the bank's own vault or on deposits in other credit institutions, where they are placed on a mandatory or voluntary basis. If the creation of mandatory reserves is provided for by banking legislation, then such primary cash reserves are called legal reserve requirements.
A commercial bank is obliged to classify assets, distinguishing doubtful and bad debts, and create reserves (funds) to cover possible losses.
A commercial bank is obliged to comply with mandatory standards established in accordance with the Federal Law “On Central Bank Russian Federation(Bank of Russia)". Thus, required reserve ratios cannot exceed 20% of a credit institution’s liabilities and can be differentiated for different credit institutions. However, required reserve ratios cannot be changed by more than five points at a time.
The amount of required reserves as a percentage of the credit institution's liabilities (required reserve ratio), as well as the procedure for depositing required reserves with the Bank of Russia, are established by the board of directors.
In case of violation of required reserve standards, the Bank of Russia has the right to indisputably write off from the correspondent account of a credit organization opened with the Bank of Russia the amount of funds not deposited, and also to recover from the credit organization in judicial procedure fine. Specified fine cannot exceed the amount calculated based on double rate refinancing of the Bank of Russia, in force at the time the court made the corresponding decision.
Optional reserves deposited by a credit institution with the Bank of Russia are not subject to collection.
A commercial bank is obliged to organize internal control, ensuring an appropriate level of reliability commensurate with the nature and scale of the operations being conducted.
The bank is obliged to comply with the standard of required reserves deposited with the Bank of Russia, including the terms, volumes and types of funds raised.
In case of revocation commercial bank license to carry out banking operations mandatory reserves deposited by him with the Bank of Russia are transferred to the account of the liquidation commission (liquidator) or bankruptcy trustee and are used in the manner established federal laws and published in accordance with them regulations Bank of Russia.
When reorganizing a commercial bank, the procedure for re-registering its required reserves previously deposited with the Bank of Russia is established in accordance with the regulations of the Bank of Russia.
When using funds from the bank's reserves, the bank must deposit the same amount to replenish the reserve. The required reserve ratio of banks is differentiated and depends on the size financial institution, type of funds raised, citizenship of investors and some other conditions. By regulating the required reserve ratio within certain limits, central bank implements its financial policy.
In order to operate without claims from the Central Bank, each bank is obliged to comply with established rules and regulations. One of these norms is the required reserve norm (RRR). Its introduction has become the main instrument of monetary policy and a guarantor of the fulfillment of the bank’s obligations to its clients, even if the bank’s financial position has been shaken.
The reserve allows the Central Bank to insure deposits of depositors. NRA also affects the volume of loans issued, overall inflation of the national currency and the issuance of debt non-cash money. Even the smallest increase in the reserve ratio can lead to a large drop in bank activity. The Central Bank tries to keep reserve norms at the same level, otherwise changes will have a painful impact on the credit institution. When the norm increases, the bank is forced to look for additional money to ensure financial stability. Money is taken from two sources: loans from the Central Bank and the sale of its own shares. Both methods reduce liquidity. If the standard is lowered, then the bank is exempted available funds, which go towards repayment current debt and increased liquidity.
What is a bank's required reserve ratio?
By changing the NOR, the Central Bank influences the creditworthiness of the bank. By reducing the standard, the Central Bank allows the bank to lend more money and earn more profit.
Reducing the NRR is also called the “cheap money policy.” It is needed to increase volume credit money, stimulating household spending, reducing unemployment.
The increase in NRR is part of the “dear money policy”. It reduces the bank's ability to issue loans. This, in turn, limits the amount of money in circulation and reduces inflation.
Obligations for the formation of reserves are formed by the bank from the moment of obtaining a license. Reserves are kept in the Central Bank in non-interest bearing accounts. In the event of bank liquidation, reserves are transferred to a special commission that deals with the liquidation of the credit institution. Money raised from legal entities for a period of 3 years, bonds with a maturity of 3 years, and non-monetary obligations ( securities, metals), obligations to credit institutions.
If reserves are not deposited into fixed time, The Central Bank has the right to write off underpayments from the bank's correspondent account. In addition, according to Article 38 of Federal Law No. 86 of July 10, 2002, the Central Bank imposes a fine for violation of no more than double the refinancing rate of the contribution amount.
How dangerous will the size of the NRR be for the bank?
An increase in NRR may have a negative impact on the bank's position. The increase means that the bank must quickly increase the share of reserves in its account with the Central Bank. It is impossible to withdraw money from circulation. The repayment periods for issued loans extend over several years. The standard cannot be changed at a time by more than 5 percentage points. Given the huge investment portfolios, even such a change can amount to a significant amount in monetary terms. Even the most stable bank cannot get hold of hundreds of millions of rubles in a moment.