Russian banks have accumulated RUR 3.3 trln ($47.1 bln) for which they can not find any application, Georgy Luntovsky, President of the Association of the Banks of Russia, said to the BBC Russian Service.
The huge amount of money accumulated by the banks equals to nearly half of the annual pensions paid in Russia. Over the past decade, funds on the accounts of credit institutions have more than tripled. Cash surplus has been accumulated due to the fact that banks do not want to extend loans to enterprises which they find insufficiently solid. Loans therefore are extended to some selected companies only.
Lending to individuals has been growing recently, but the scope is still low. Besides, the process is constrained by the Central Bank which fears overdue loans may grow resulting in an overall banking system crisis.
Banks therefore do not need to borrow money from the Central Bank (which is a worldwide practice). Quite the opposite, they deposit their funds with the regulator in order to get whatever interest on their spare money. Banks thus fail to correspond to their major purpose of financing national economy. Many experts find such a situation rather strange. On the other hand, banks do not bear any risks, and stability of the national financial system is therefore maintained.