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The Association of the Russian Banks attempts to deal with the restructuring of the individual debts
16.06.2015
Maxim Rovinskiy, Partner of the Law Firm "YUST", told the Vedomosti newspaper, why the new law on bankruptcy of individuals is disadvantageous to the banks: “In the case of initiation of the first bankruptcy of the borrower, the bank is obliged to create a 100% reserve. Besides, the risks of contestation of the debtor’s transactions over a rather long period of time – up to three years from the moment of filing of the request to be ruled bankrupt – are also high”.
The Association of the Russian Banks together with the Central Bank of the Russian Federation may launch in September a pilot project of restructuring of the debts of the individuals, who have credits in several banks. The ARB elaborated the standard of restructuring of the individuals’ debts in December of 2013, and the inter-banking restructuring center “Doverie (Trust)” was established in 2014. It is on the base of this center that the pilot project in Bashkiria will be launched. The Center’s work is aimed at that the borrower should be able to repay the debt and to avoid cross-default on other loans, or else each creditor will fight for their own interests, and everyone would lose – and this will cause the increase of late debts for the banks and the deterioration of the quality of their portfolio.
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Maxim Rovinskiy, Partner of the Law Firm "YUST", told the Vedomosti newspaper, why the new law on bankruptcy of individuals is disadvantageous to the banks: “In the case of initiation of the first bankruptcy of the borrower, the bank is obliged to create a 100% reserve. Besides, the risks of contestation of the debtor’s transactions over a rather long period of time – up to three years from the moment of filing of the request to be ruled bankrupt – are also high”.
The Association of the Russian Banks together with the Central Bank of the Russian Federation may launch in September a pilot project of restructuring of the debts of the individuals, who have credits in several banks. The ARB elaborated the standard of restructuring of the individuals’ debts in December of 2013, and the inter-banking restructuring center “Doverie (Trust)” was established in 2014. It is on the base of this center that the pilot project in Bashkiria will be launched. The Center’s work is aimed at that the borrower should be able to repay the debt and to avoid cross-default on other loans, or else each creditor will fight for their own interests, and everyone would lose – and this will cause the increase of late debts for the banks and the deterioration of the quality of their portfolio.
Read more
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