Russian Banks Intend To Fool Depositors

There is an initiative to prohibit prescheduled withdrawal of bank deposits

The Russian government and the Central Bank of Russia has made many attempts to guarantee the deposits of the Russian population. The majority of those attempts failed. It seems that this issue came off, there is hardly a hope for the mass increase of accounts in Russian banks. However, Russian bankers have been saying all the time that banks should be protected from the abuse on the part of depositors too. It deems that Russian bankers have achieved some progress in this respect.

To all appearances, the idea caused a vivid reaction and sympathy on the part of Finance Ministry officials. At least, this department has been discussing the idea to ban the prescheduled withdrawal of deposits lately. In addition to that, there is an impression that this idea has already been documented. At least, according to Russian news reports, adequate paragraphs were introduced to the amended “Strategy for the development of the bank sector of the Russian Federation for the period of 2003-2007.”

The idea to prohibit the prescheduled withdrawal of Russian people’s deposits is not new at all. The peak of its popularity took place during the default of the year 1998. As it is known, millions of Russian depositors rushed to close their bank accounts at that time. As a result, depositors ruined largest and most reliable banks of the country within just a week. The head of the ruined bank SBS-Agro (although the bank ruined its clients too), Alexander Smolensky, accused the Russian government of the strategic mistake. He particularly meant the article of the Civil Code, which allowed to withdraw deposits ahead of the scheduled time. Russian bankers attempted to promote the idea to ban such a withdrawal. They showed pressure on former deputy chairman of the Russian Central Bank Viktor Geraschenko, who was known for his position to protect banks from the abuse on the part of depositors. However, Geraschenko’s career ended up for political reasons. The real opportunity to make the state protect banks from the atrocities of uncontrollable depositors has appeared only recently.

Yet, Russian officials are basically thorough and stubborn people. If someone likes that idea, why not making it extreme? The officials of the Russian Finance Ministry believe that the new bank deposit contract is supposed to provide an opportunity of prescheduled withdrawal of deposits only on the occasions, which are directly stipulated by a certain contract. This is pretty much it. Article 9.3 of the draft law stipulates considerable fines in case of prescheduled withdrawal of deposits.

There is a question coming up in this respect: where are banks going to find the fools that would agree to entrust their lifetime savings under such crushing terms, taking into consideration the fact that life is full of surprises? What about fires, floods, not to mention car accidents and the like? Banks do not seem to care about it: a clerk will only show you a copy of the contract that you signed yourself.

Yet, Russian officials are hard nuts to crack. As a matter of fact, the Russian Finance Ministry believes that all people are more stupid than they actually are. The ministry explained its initiative with the wish to take care of depositors. Ministerial officials also said that there was a need to strengthen the resource base of Russian banks. Now, this seems to be interesting. More explanations followed from the Finance Ministry later. As it was explained, no one was going to cancel current accounts and fixed deposits with a right of withdrawal. Of course, such a hasty decision might double (if not triple) the potential electorate of the Communist Party of Russia (CPRF). Ministerial officials also said that new deposits with restricted withdrawal would have higher interest. At the end of the day, a depositor will have an opportunity to choose. There is nothing to object about it, indeed. A potential Russian depositor that rushes between dollar and euro at present will definitely sympathize with euro, if his freedom to take his money away from a bank at any moment is restricted. A depositor will save money in the European currency, and there will be no way to make him go and open a bank account.

Finance Ministry officials try to convince their opponents, speaking the civilized language of economically developed Western countries. However, Russian officials forget that Russia is a country of shadow economy, a country of concealed income, spending and savings. The European or American economic transparency is out of the question for Russian banks. If bankers manage to convince depositors to conclude new contracts, they will obtain a predictable situation, as the proponents of withdrawing restrictions think. However, a common Russian depositor does not care about the problems of a banker, who drives his fancy jeep and spends his vacation in European ski resorts? These are like two different worlds. Does a Russian citizen care about the financial stability, which is Russian bankers’ major goal? No, he doesn’t. The decade of economic reforms in the country made Russian people take care of their own wallets only. Nothing else matters. Isn’t this exactly the thing that Russian liberal reforms wanted? Reap as you have sown, so to speak. That is why Russian bankers keep on backing up an “incidental” initiative of the Finance Ministry. Bankers will have to convince depositors themselves, though. It goes without saying that banks’ press services and PR agencies will exert themselves to the utmost. There are no more fools, everyone is smart now.

Kira Poznakhirko PRAVDA.Ru

Translated by Dmitry Sudakov

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