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22 Apr, 2009 14:00

PM Putin opens purse for more banking and small business support

PM Putin opens purse for more banking and small business support

A meeting between Prime Minister Vladimir Putin and senior officials from Russian banks has seen support for the financial sector increased by $14 billion dollars to increase bank capitalization.

That will bring state support for Russia’s banks to $36 billion dollars. In exchange banks have committed to revealing the bonus’ earned by senior managers, and freezing interest rates for corporate borrowers. The Prime Minister emphasized that support from the banking sector for the wider economy was vital.

“The amount of lending to the real sector and individuals must equal the amount of financial support that a bank got from the government. And the interest rate must not be more than Central Bank's refinancing rate plus 3%. This means the final credit rate to a borrower must be 16%, including all the commission charges.”

The announcement came after the Prime Minister had unveiled a 10 fold increase in support for small and medium sized businesses with $3 billion of state funds to be directed to the sector. The money will directed to help startups, on microfinancing and subsidised loans. The support measures also include the doubling of the threshold for lighter taxation to earnings of $2 million.