Bad debts can be both a consequence of the borrower’s reduced financial circumstances and an instrument of unfair banking. Each of these problems has its regulatory solution but the key principle should be market responsibility of the owners and managers.
A sound banking system, a moderate bad debt level, prompt recognition of the problem which bad debts pose and dealing with them effectively, are essential preconditions of not only financial stability and depositor protection but also of economic growth.
Due to the small size and volatility of the Russian money market, Russian entities choose two extremes as benchmarks for their interest rates – the key interest rate and the MosPrime rate, at which banks themselves do not lend to one another.
Putting off an increase in the retirement age has cost Russia cuts in spending on development and increased pressure on the workforce. The next step is to estimate how much the budget will gain from the reform and to find the most effective way to use this money.
Five years ago, half of all Russian banks provided a full range of banking services to companies and households; now only one in three do. Banks are opting to specialize more narrowly or to move away from clear business models altogether.