MOSCOW, March 19 (Reuters) - Russia’s central bank on Friday said it would reduce the amount of money banks can borrow via its collateral-free loans, continuing a drive to move the sector away from the crisis-time funding tool. The new limits will be introduced from May 1, the central bank said, without giving details. “The decision is the next stage in the Bank of Russia’s policy to reduce the scale of the use of collateral-free loans and re-orientate Russian lenders towards traditional credit tools,” the regulator said in a statement. The collateral-free loans were introduced in autumn 2008, to see banks through the worst of the economic crisis and global credit crunch.
With the economy and the financial markets stabilising, the central bank wants to reduce exposure to the risky tool and from February tightened the rules, making around 60 banks no longer eligible for such funding.
A revival in the domestic money market -- where a rallying rouble and ample liquidity has pushed down 3-month MOSPRIME rates to levels not seen since 2006 -- has helped dampen banks’ appetite for the relatively expensive collateral-free loans.
As of March 18, banks owed the central bank 75 billion roubles ($2.56 billion) in such loans -- down sharply from 1.8 trillion rouble this time last year. (Writing by Toni Vorobyova; Editing by Ruth Pitchford)