On 29 April 2010 the Central Bank issued Directive No. 2439-U decreasing the refinancing rate. The Directive entered into force on 29 April 2010.

The Central Bank has decreased the refinancing rate from 8.25% (which was effective as of 29 March 2010) to 8% per annum. The new rate applies as of 30 April 2010.

The Central Bank sets the refinancing rate for its financing of commercial banks. The rate is also used for calculating interest on commercial loans (if the rate is not specified in an agreement), tax payments and in other cases provided by law.

On 2 April 2010 the Central Bank issued Instruction No. 135-I "On the Procedure for the Adoption by the Bank of Russia of Decisions on the State Registration of Credit Organisations and on the Issuance of Banking Licences." The Instruction entered into force on 11 May 2010 and invalidated Central Bank Instruction No. 109-I, dated 14 January 2004, on the same matter.

The Instruction generally represents the current Central Bank Instruction No. 109 I, dated 14 January 2004, on the same matter, and contains just a few changes.

In particular, it excludes exchange offices from the list of internal subdivisions that a credit organisation may have, and provides that an internal subdivision's functions may not be limited to the sale and purchase of cash foreign currency only (see below, Banks may not open exchange offices as of 11 May 2010).

The Instruction also introduces a number of exemptions from the rule requiring that in certain cases where a credit organisation's charter capital is increased, the Central Bank must check the sources of funds used to pay for that increase.

In particular, it provides that such checks may not be required if either:

On 2 April 2010 the Central Bank issued Directive No. 2423-U regarding the change of status or closing of exchange offices. The Directive entered into force on 11 May 2010.

The Directive bans credit organisations from opening exchange offices as of the date of its entry into force (that is, 11 May 2010).

Foreign currency exchange offices opened earlier must be either:

Such actions must be taken by 1 October 2010.

Central Bank Instruction No. 113-I, dated 28 April 2004, regarding operation of exchange offices, will apply to the extent it does not contradict the Directive.

On 8 April 2010 the Central Bank informed on its Letter No. 04-15-6/1550 "On Evaluation of Banks' Exposure to Their Owners." The information in this Letter was published in the Central Bank Herald on 14 April 2010.

The Central Bank has recommended that its territorial departments conduct an evaluation of the banks' exposure to their owners and affiliates. It suggested a tentative list of criteria to establish that a bank mainly services the business of its owners.

The territorial departments have been recommended to report on the results of the evaluation to the Central Bank and, where the amount of exposure exceeds 20% of the banks' capital, recommend for the banks and their owners to decrease such exposure within a reasonable time.

On 22 April 2010 the President signed Federal Law No. 65-FZ amending Federal Law "On Insolvency (Bankruptcy)" and certain other legislative acts (Law). The Law, except for a few provisions, will enter into force on 27 July 2010.

The Law introduces a comprehensive set of rules setting out the specifics of bankruptcy (insolvency) of financial organisations. It does not affect credit organisations, but applies to other financial organisations, such as insurance companies, professional participants in the securities market, non-state pension funds, and management companies of investment funds, mutual investment funds and non-state pension funds.

In particular, the Law requires application of measures aimed at preventing bankruptcy of a financial organisation in certain cases. The preventive measures (for example, financial assistance and restructuring) are developed and applied by a financial organisation itself or by a temporary administration. The temporary administration may be, and in certain cases must be, appointed by a controlling authority (that is, a licensing body for the respective financial organisation).

The scope of bankruptcy procedures, which may be applied to a financial organisation, as opposed to an ordinary company, does not include financial rehabilitation and external management. Moreover, the supervision stage is not applied to a financial organisation either, if the bankruptcy process is initiated by a temporary administration which believes that its solvency may not be restored.

In addition to the general rules regarding bankruptcy of financial organisations, the Law contains rules addressing specifics of particular financial organisations.

On 27 April 2010 the Presidium of the Supreme Commercial Court issued Information Letter No. 137 regarding the application of recent changes to the Bankruptcy Laws on challenging debtor's transactions and subsidiary liability of debtor's controlling persons.

The Court clarified the application of new rules on challenging debtor's transactions and subsidiary liability of the debtor's controlling persons which entered into force on 5 June 2009 (see PLC Global Finance: Russian Federation Special Update: Amendments to Bankruptcy Legislation (published in July 2009)).

The Court clarified that the new grounds for challenging debtor's transactions and the new rules of the liability of the debtor's controlling persons do not apply if the transactions were made, or the grounds for holding the debtor's controlling persons liable occurred, before the amendments entered into force, in both cases - irrespective of when the bankruptcy proceedings have been initiated.

On 23 April 2010 the State Duma adopted in the first reading Draft Law No. 220751-5 amending Federal Law "On Mortgage (Pledge of Immovable Property)."

The Draft Law seeks to amend a number of rules to increase the effectiveness of the out-of-court procedure. In particular, it allows the parties to agree that the starting price of the mortgaged property be decreased in the course of the public sale (currently the law requires that mortgaged property be sold to the highest bidder).

The provisions of the Draft Law will apply if adopted by the State Duma in three readings, approved by the Federation Council, signed by the President, and officially published.