OREANDA-NEWS. May 15, 2009. The Bank of Russia plans to extend until March 1, 2010 the validity of the right to average mandatory reserves for all banks that committed no violations with regard to reserves and permit lending institutions under rehabilitation not to form reserves under obligations to the Deposit Insurance Agency (DIA) or investors which are not lending institutions, according to draft instructions posted on CBR’s website.

At the height of the crisis on the Russian financial market last fall the Central Bank of Russia decided to temporarily soften requirements for banks with regard to reserves, applying on an interim basis the right to average reserves for all lenders that meet its requirements. This provision is valid until July 1, 2009.

By exercising this right, banks could hold a portion of their mandatory reserves on CBR correspondent accounts and use these funds to maintain liquidity positions. Before this, the right to average reserves, when the average balance of funds held on a lending institution’s correspondent account opened with CBR is taken for the fulfillment of the obligation to form mandatory reserves, was available only to lending institutions from the first and second qualification groups (classified in terms of their economic status). The Bank of Russia again decided to downgrade requirements also for banks that tap into DIA coffers.