Banking System

The Russian banking system has a bi-level structure. The first level is represented by the Central Bank of the Russian Federation. The second level includes banks and non-bank financial companies, as well as branches and representative offices of foreign banks.

The second level of the banking system includes lending agencies. Among these are: Bank and Non-bank financial company, Russian banks with foreign capital, or branches of foreign banks. The primary purpose of the lending agencies is carrying out Credit Facilities Operations, Corporate and Retail Banking Services as well as Deposit Servicing for customers and economic entities.

A lending agency is a legal entity that can by right of a special permission (license) from the Central Bank of the Russian Federation (Bank of Russia) conduct banking operations prescribed by the Banking Act for profittaking as the main goal of its activity.

A bank is a credit organization that holds an exclusive right to conduct the following banking operations in a body: attraction of deposits of monetary resources from physical persons and legal entities, investment of abovementioned funds on the basis of urgency, repayment and interest payment on its behalf and for its own account, sitting up and maintaining bank accounts for individuals and legal entities.

A Non-bank financial company (NFC) is a credit organization that holds the right to conduct certain banking operations. Admissible combinations of banking operations for non-bank financial companies are established by the Bank of Russia. NFCs can carry out settlement, deposit, lending transactions, as well as cash, bill, billing and accounting document collection.

A banking group is an association of credit organizations wherein one (parent) credit organization directly or by indirection (by mesne) influences the decisions of the governance board of the other credit organization (s).
A bank holding company is an association of legal entities with the involvement of credit organizations. A legal entity in it not being a credit organization (the main agency of a bank holding company) able to have a significant impact (either specifically or by implication) on the decisions of the lending agency governance board.

Russian banks are not isolated from the external environment. They look for a variety of essential services to maintain their economical functions that can be provided by the banking infrastructure. The banking infrastructure has only been increasing in its value recent years. By this we mean a set of institutions that mold major conditions for banking operations and promote banking services creation and their delivery to the consumers. These include:

• a deposit insurance scheme that ensures safe-conduct of deposits of citizens in banks to the extent permitted under applicable law, which is carried out by the special State Deposit Insurance Agency (SDIA);
• independent payment systems accommodating in payments settlements between organizations and banks, such as SWIFT, and payment transactions on plastic cards, such as VISA. MasterCard, American Express;
• auditing firms that provide independent auditing of the operations of both commercial banks and the Central Bank of the Russian Federation, and assisting the confirmation of their financial statements;
• information and advice services and legal organizations assisting banks in business development and representing their interest when dealing with customers and government agency;
• provider organizations that supply information technology solutions and develop modern banking technologies. Their major goal is in business processes automation which helps to achieve high-security level;
• educational organizations engaged in advanced training and retraining ofbank officials. They give various seminars and further courses, that help the employees to get a grasp of the complexity of modern banking, which is essential for normal banking operation.


The sources of the banking legislation of the Russian Federation are: the Constitution of the Russian Federation; norms of international banking law and international treaties of the Russian Federation; decrees of the Constitutional Court of the Russian Federation; Civil Code (CC) of the Russian Federation: Federal Statute 'On Banks and Banking Activities'; Federal Statute 'On the Central Bank of the Russian Federation (Bank of Russia)'; sublegislative statutory and regulatory enactments (instructions, regulations, circulars, etc.).