OREANDA-NEWS. November 03, 2010. Interview of S.P.Krjukov, Chairman of the Board of the Russian Bank for Development (RBD) to the Russian Business Newspaper, reported the press-centre of RBD.

RBD’s new program "Financing for Innovations and Modernization” enables to channel to the innovative projects the main market resource – bank money. The program was launched at the end of August and practically immediately the first transaction was accomplished. How interested are the banks in the innovative projects, what terms can they admit and what are the prospects for large-scale participation of the banks in the innovative projects? Our correspondent is posing these questions to Sergey Krjukov, Chairman of the Board of RBD.

 - Sergey Pavlovich, how many banks participate already in the new program – investments in innovations, and how many banks show concernment?
 - Financing for Innovations and Modernization program started in August 2010. At present 18 partner banks are involved in it. Applications from four banks are under consideration now, some banks are discussing with us matters related to preparing and executing the applications. We are negotiating with 80 banks that have expressed their interest in cooperation under the program.

 - In what projects and at what stage of development do they intend to invest funds?
 - Different projects are offered: starting from modernization of the existing production to introduction of innovative technologies in different industries. According to the program we select projects that have already passed the start-up stage. Criterion for the innovative projects is availability of patents (or applications for patents) and test data that prove efficiency, ecological properties, energy efficiency and safety of technologies or products. We provide loans for modernization projects for acquisition of new high-technology equipment, software and “know-how” (patents and/or licenses); certification of conformity of the engineering procedures with the modern requirements and regulations.

Speaking about the stages of business development we must point out that the program envisages that RBD creates an "innovative lift" for SME so that the entrepreneurs could receive funding at different stages of life cycle of the enterprise. To this effect in spring 2010 a 9-party "Cooperation Agreement of the Institutions for Development and Interested Organization in the Area of Continuous Financing of Innovative Projects at All Stages of the Innovative Cycle" was initiated and signed. Apart from RBD the agreement was signed by: Vnesheconombank, RBK, "Rosnano", Foundation for Assistance to Small Innovation Enterprises in Science and Technology (FASIE), RAVI, MICEX, "OPORA ROSSII", Federal Agency for the Youth Affairs.

 - Who proposes the projects – the banks or RBD?
 - The projects come from various sources: banks, companies, participants of the 9-party agreement, от research organizations, participants of venture fairs and events attended by RBD.

 - What conditions of investments in the innovations are acceptable for banks, what is the size of the government support (by RBD, "Rosnano" and etc.)?
 - The condition of the "FIM" Program is obligatory involvement in the transaction of the initiator of the project – no less than 15% of the total funding. It is noteworthy that the initiators of the projects are innovative SMEs for whom the participation in the RBD Program is sometimes an only opportunity to receive a long-term (up to 7 years) funding under favorable interest rate ( 8 – 11.5% p.a. in rubles). RBD reduces a margin of the partner-bank for the and-borrower in the loan agreement; it means that the cost of the borrowed funds shall not exceed 11.5% p.a. for a company implementing the project. We have already cooperated on these projects with FASIE that included but not limited to compensate the interest rates for borrowers, and "Rosnano" that can provide guarantees and acquire shares in the company.

For example, The Bank of Moscow project "Basalt – New Technologies" is the first innovative project selected for financing under the 9-party Agreement designed for establishing in Yakutia a plant producing building materials from basalt fiber with the use of nanocomponents.

The project provides for implementation the concept of the "innovative lift" within the framework of which RBD has put together financing from the partner-bank (The Bank of Moscow) and "Rosnano" at different stages of development of the innovative enterprise.

 - What are the prospects for the banks’ active investing in innovations?
 - According to the banks the program is demandable since it is interested to both the banks and the borrowers due to the low interest rates and long tenors, as well as due to the involvement of the Direct Investments Fund created by RBD. Currently a portfolio of projects is being formed; among them are unique innovative projects of SMEs aimed at production polymeric materials, gyroscopes, medical equipment, building materials and etc.

The Fund "MIR" is introducing to the market a model of attracting the RBD’s partner-banks to co-financing innovative projects of SMEs, providing a blended finance  (through acquisition of shares in SME) and debt finance (through lending to innovative and modernization projects of SMEs via the partner-banks). The banks that have the borrowers with adequate projects have already applied or are applying to the program and they are starting to finance these projects. The banks that don’t have the prepared projects yet, are interested in the program and apply to it so that within 6 months (pursuant to the loan agreement) they can find projects and finance them using the RBD’s credit resources. We seek to develop cooperation under the Program with the regional banks engaged in stirring transactions with SMEs and interested in implementation of modernization and innovative projects in the territory of their presence.