On Bank of Russia Ordinance No. 4019-U, dated 18 May 2016 (5/24/2016)

MIL OSI – Source: Central Bank of the Russian Federation in English –

Headline: On Bank of Russia Ordinance No. 4019-U, dated 18 May 2016 (5/24/2016)


On Bank of Russia Ordinance No. 4019-U, dated 18 May 2016, ‘On Amendments to Bank of Russia Ordinance No. 3194-U, Dated 27 February 2014, ‘On the Procedure for Disclosing by Credit Institutions Information about Interest Rates on Household Bank Deposit Agreements’
The Bank of Russia issued Ordinance No. 4019-U, dated 18 May 2016, ‘On Amendments to Bank of Russia Ordinance No. 3194-U, Dated 27 February 2014, ‘On the Procedure for Disclosing by Credit Institutions Information about Interest Rates on Household Bank Deposit Agreements’ (submitted for state registration to the Ministry of Justice of the Russian Federation) (Ordinance No. 4019-U).
Ordinance No. 4019-U is specifies the approaches to disclosing information on interest rates under household bank deposit agreements and calculating the effective interest rate on deposit (EIRD) established by Bank of Russia Ordinance No. 3194-U, dated 27 February 2014, ‘On the Procedure for Disclosing by Credit Institutions Information about Interest Rates on Household Bank Deposit Agreements’ (Ordinance No. 3194-U).
Ordinance No. 4019-U introduces the following amendments:
1. Ban on amending (deleting) information published in accordance with Ordinance No. 3194-U before its disclosure in the next reporting period.
2. Requirement to title the disclosed information ‘Information on Maximum Interest Rates on Household Deposits’.
3. If amended provisions of agreements fail to result in changes in the EIRD calculated as of the day when the agreement was concluded (amended, extended), such agreements shall not be considered for disclosing of information on maximum interest rates on household deposits.
4. The EIRD calculation shall be based not only on the deposit value (funds) accepted as of the day when the agreement was concluded, but also the amount by which the deposit (account) was credited during the respective operation day.
5. Cases when financial benefit is included in the EIRD calculation are supplemented with a case when the depositor declares their agreement to receive it during the day when the agreement is concluded (amended, extended).
6. The value of prize in the amount of the maximum prize cost in contests, lotteries and other events, where the winner is not known in advance, shall be considered as other financial benefits.
7. If the bank account balance under the agreement equals zero or has a negative value, the EIRD shall be calculated using any positive value of deposit amount.
8. If the bank deposit (account) agreement contains a provision providing for the maximum interest accrual if it is met, the EIRD shall be calculated based on the deposit value equal to the amount where the interest income will be the highest possible.
9. If the call bank deposit agreement or the bank account agreement contains a provision stipulating that depending on the term of depositing funds on call deposit (account) the contractual interest income shall change, when the agreement is concluded (amended, extended), the EIRD shall be calculated with inclusion in the calculation of the number of calendar days equal to the term of depositing funds on the call deposit (account) when the interest income will be the highest possible.
10. If deposit conditions provide for maintaining the contractual nominal interest rate (rates) or its (their) minimum change in case of early withdrawal, several EIRD shall be calculated for such an agreement, namely, for the cases when the agreement may be terminated at its maximum profitability in each period (within the contractual term of deposit) established by Ordinance No. 3194-U for disclosure of information on maximum interest rates on household deposits.
Ordinance No. 4019-U shall be applied for the disclosure of information on maximum interest rates on household deposits in July 2016.

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