Russian Banking Law

The Constitutional and Legislative Framework

The Constitution of the Russian Federation, adopted in 1993, establishes the foundations of the banking system at Articles 71 and 75, which place monetary and credit policy within the exclusive jurisdiction of the federal government and designate the Central Bank of the Russian Federation (the Bank of Russia) as the institution responsible for protecting and ensuring the stability of the ruble. The Federal Law on the Central Bank of the Russian Federation No 86-FZ of 10 July 2002 defines the legal status, functions, and powers of the Bank of Russia, while the Federal Law on Banks and Banking Activity No 395-1 of 2 December 1990, as substantially amended, serves as the primary legislative framework governing the operation of credit organisations.

The Two-Tier Banking System

The Russian banking system follows a two-tier structure. The upper tier consists of the Bank of Russia, which acts as the central bank and the regulator of the banking system. The lower tier comprises commercial credit organisations, including banks and non-bank credit organisations. The Bank of Russia is independent in the exercise of its functions and reports to the State Duma. Its primary functions include conducting monetary policy, issuing currency, regulating and supervising credit organisations, and ensuring the stability of the financial system. The Governor of the Bank of Russia is appointed by the State Duma on the nomination of the President for a term of five years.

Types of Banking Licences and Capital Requirements

Credit organisations in Russia must obtain a licence from the Bank of Russia to conduct banking operations. The law distinguishes between two categories of banks: banks with a general licence, which may conduct all types of banking operations without restriction, and banks with a basic licence, which are subject to limitations on the scope of operations, including restrictions on the types of foreign currency transactions and on the maximum aggregate risk exposure. The minimum authorised capital requirement for a general licence bank is 1 billion RUB, while for a basic licence bank the minimum is 300 million RUB. Non-bank credit organisations have a reduced minimum capital requirement of 90 million RUB.

The Deposit Insurance System

The deposit insurance system, established by the Federal Law on Insurance of Deposits of Individuals in Banks of the Russian Federation No 177-FZ of 23 December 2003, protects deposits of individuals up to 1.4 million RUB per depositor per bank. The system is administered by the Deposit Insurance Agency (Agentstvo po Strakhovaniyu Vkladov, ASV), a state corporation that collects premiums from member banks and manages the deposit insurance fund. The ASV also acts as a receiver in the liquidation of failed banks and has the power to impose compensatory payments to depositors. Insurance coverage extends to deposits in Russian rubles and foreign currency, with foreign currency deposits insured at the equivalent amount in rubles.

Regulation of Foreign Banks and Anti-Money Laundering

Foreign banks may establish operations in Russia through representative offices, branches, or subsidiaries. Subsidiaries of foreign banks are subject to the same licensing and regulatory requirements as domestic banks, while branches have more limited scope. The Bank of Russia sets limits on the participation of foreign capital in the Russian banking system. The anti-money laundering framework is governed by Federal Law No 115-FZ of 7 August 2001 on Countering the Legalisation (Laundering) of Proceeds from Crime and the Financing of Terrorism, which requires credit organisations to conduct customer due diligence, identify beneficial owners, report transactions exceeding 600,000 RUB to the Federal Financial Monitoring Service (Rosfinmonitoring), and maintain internal control rules. The Bank of Russia may apply early intervention measures, including the appointment of temporary administration and the imposition of restrictions on operations, where a bank’s financial condition deteriorates. Systemically important credit institutions (SZIKS) are subject to enhanced supervisory requirements, including higher capital buffers and more intensive oversight.