The Bank of Russia makes it easier for RNCOs to work with cross-border settlements

The Central Bank is ready to change regulations so that settlement non-bank credit organizations (RNKOs) can more actively open correspondent accounts in foreign banks. Now RNKO is not a very popular form of license due to significant restrictions compared to even small banks and regulatory arbitrage. The changes announced by the Central Bank may intensify cross-border settlements and make this form of a credit institution more in demand, experts say.

The Bank of Russia has published a draft amendment to Instruction 207-I, which regulates the activities and standards of NBSCOs. The changes, as emphasized by the Central Bank, will help make cross-border payments and settlements with resident banks of friendly states, including through the system of correspondent relations.

The project softens the N16.1 standard, which sets the indicator for issuing loans to borrowers on their own behalf and at their own expense (except for clients participating in settlements). From his calculation, it is proposed to exclude the balances of money on correspondent accounts in resident banks of friendly countries, regardless of their international rating. The balances of these funds on correspondent accounts will be included in the calculation of the H6 ratio (for one borrower or a group of related borrowers) in full if the non-resident bank has an international rating below BBB-.

RNKO and banks have different basic principles of operation, banks provide comprehensive banking services, while RNKO, in fact, specialize in the development and implementation of technologies for electronic payments and banking transactions, that is, they perform a very narrow list of operations, and their actions are strictly limited, explains Ilya Zharsky, managing partner of Veta expert group.

According to Viktor Dostov, head of the Association of Electronic Money Market Participants and Money Transfers, at the moment there are not very many RNKOs, since this is a rather expensive institution, greatly reduced relative to a bank. Perhaps this measure will lead to the activation of this form of organization, especially if the issue of reducing the amount of own funds and other mandatory standards is raised. “We can expect both the emergence of universal RNKOs and captive ones created by large companies and holdings to suit their own tasks,” he believes.

Executive Director of the National Payment Association Maria Mikhailova draws attention to the fact that RNCOs are specialized payment institutions, the effectiveness of which for the economy remains underestimated. “Not only did the regulatory framework for the activities of the RNCO not only historically contain a whole set of not entirely clear restrictions and requirements, but it began to be updated quite recently,” she explains. “There was a kind of paradox – a specialized settlement institution was deprived of the right to build correspondent relations with foreign banks for settlements” .

“The Central Bank continues to move towards lifting restrictions on opening correspondent accounts abroad. Previously, this was done for banks with a basic license, now for RNCOs,” says Roman Prokhorov, head of the Financial Innovations Association. “In the context of sanctions being imposed on most of the largest credit institutions, this approach creates some prospects.”

However, it is hardly worth expecting that this measure will significantly affect the situation with cross-border settlements, Roman Prokhorov believes. We should not forget that in the latest packages of sanctions, the share of small banks has significantly increased, including those that were quite active in cross-border settlements, the expert reminds.

In addition, there are serious concerns that the potential opportunity will again turn into an actual barrier laid down in the text of the regulatory act, since the ability of RNKO to use the opportunities provided does not directly depend on the compliance of market participants with precise requirements, but on whether the regulator has reason to believe that there are certain obligations. credit institution, notes Maria Mikhailova: “We hope that during the public discussion of the document we will be able to find a solution that will allow us to develop an international settlement infrastructure based on transparent requirements and without creating unreasonable risks.”

Ksenia Dementieva, Maxim Builov