Russia's banks overcharging small businesses-Medvedev

GORKI Russia Jan 12 (Reuters) - Russia's president Dmitry Medvedev criticised state banks on Thursday for imposing high interest rates on loans for small and medium businesses, and stressed the importance of supporting fledgling firms.

Russia has been trying to boost small businesses as it tries to reduce the economy's dependence on oil and gas revenues. Critics have said small businesses are the most prone to the country's red tape and corruption.

Medvedev said Russia has a very specific situation with inflation at 6.1 percent and the refinancing rate at 8 percent, but lending to medium and small businesses is around 12.7 percent at VTB, Russia's second biggest lender.

"You must agree that there is a significant overhang, not just three percent," Medvedev told heads of three main state lenders in his Gorki residence outside Moscow. "What we really have is a doubling of the cost of money (borrowing) versus existing cumulative inflation."

VTB President Andrei Kostin complained about the shortage of liquidity which keeps interest rates high, but reassured Medvedev state lenders will unlikely raise rates next year.

"If the banking sector will receive enough liquidity, including (cash) as part of state support, we will keep interest rates at the current level...and could even lower them," he said.

VEB, another major lender which allocated a total of 200 billion roubles ($6.30 billion) to small and medium businesses last year at an average of 12 percent, sees lending to small and medium businesses as a priority, its chairman Vladimir Dmitriev said.

"It is important that we support small and medium sized businesses... and we support the collaboration between financial institutions," he said.

VEB is also in the process of setting up a 1 billion euro ($1.27 billion) investment fund with Germany to finance small and medium-sized businesses in Russia.

This should be operational by the end of March, the chairman of Russia's state-owned bank VEB said on Thursday at a meeting with Medvedev.

Russia and Germany agreed in July to set up the investment fund, targetting that it will be 1 billion euros in size in 2-3 years. ($1 = 31.7693 Russian roubles) ($1 = 0.7882 euros) (Reporting by Alexei Anishchuk; Writing and additional reporting by Megan Davies and Alexei Anishchuk; editing by Ron Askew)