Restrictions on Deposits for LPR and DPR Banks in Newly Integrating Regions
Banks that are branches of South Ossetian financial institutions, including LPR and DPR entities, operating within the areas recently incorporated into the Russian Federation will not be permitted to increase deposit balances beyond the level recorded on February 13, 2023. This stance was clarified in a formal document published on the Central Bank of Russia’s official site.
The document explains that these specific categories of banks will not be allowed to withdraw funds from both individuals and legal entities that fall under the deposit insurance framework if the balance surpasses the threshold set on February 13. This rule applies to deposits and bank accounts and is meant to control liquidity in light of regional regulatory changes.
In addition, the document requires banks to furnish regular reports to the Central Bank. The reports must include details such as the number of active accounts, current balances, and other relevant information that helps authorities monitor the soundness and stability of the banking system in the newly integrated regions.
The Central Bank noted the presence of a nontraditional banking structure in the new areas. Specifically, the Bank for International Reconciliation, which is registered in South Ossetia, is operating there. This bank does not hold a Central Bank license within these territories. Therefore, customers must be clearly informed that this institution is not a member of the Russian deposit insurance system and that their deposits may not access the same protections as deposits placed with licensed Russian banks.
Towards the end of November, industry publication Kommersant reported remarks from the press service of the Russian Ziraat Bank. The publication noted that the Central Bank had introduced temporary regulatory relaxations aimed at preserving lending momentum across both corporate and retail segments. These adjustments have, as reported, reduced the intensity of competition among banks for customer funds, enabling lenders to continue extending credit while maintaining prudent risk controls. The commentary underscored how the new regime seeks to balance lending activity with the need to safeguard depositors and maintain financial stability during a period of regional regulatory consolidation.
In summary, the Central Bank is actively guiding the behavior of banks operating in the recently integrated zones by setting clear deposit thresholds, mandating transparent reporting, and clarifying licensing and insurance status. The overarching objective is to preserve liquidity, support ongoing lending, and manage risk as the regional financial landscape evolves under updated supervisory rules.