17 march 2011

Background materials for the March 17, 2011 Government Presidium meeting (Press release)

PRESS RELEASE*

The following issues are scheduled for discussion at the March 17, 2011 meeting of the Government Presidium

1. Draft strategy of the banking sector’s development in the Russian Federation in the period until 2015

The draft strategy submitted by the Ministry of Finance is a successor to similar strategies developed in 2001 and 2005, whose implementation was instrumental in substantially expanding the range of banking services available in the Russian Federation.

Under the draft strategy, the primary aim of the banking sector’s development in the medium term is to make an active contribution to the economy’s modernisation through a marked improvement of the standard and quality of banking services rendered to organisations and households, while ensuring the sector’s systemic stability.

To achieve this goal, it is necessary to switch from the predominantly extensive model of the banking sector’s development to an intensive model marked by a high level of competition in the banking sector, the availability of diverse and modern banking services, a level of banking sector capitalisation matching the task of development, increased competitiveness and effectiveness in the banking sector, a developed system of corporate governance and risk management, a high degree of transparency and market discipline at lending institutions, responsible CEOs and bank owners to ensure balanced business and the accuracy of information published and submitted to control and supervisory bodies.

One of the priorities of the Government of the Russian Federation and the Bank of Russia in introducing an intensive model for banking sector development is to comprehensively improve the legal conditions of lending institutions’ activities, including the reduction of unwarranted administrative burdens. The draft strategy identifies a broad spectrum of areas of activity for the Government of the Russian Federation and the Bank of Russia in promoting competition in the banking business, introducing modern banking technologies, protecting the rights of financial service users, the development of financial support for small businesses and households, the prevention of bankruptcy at lending institutions, and the improvement of banking regulation and supervision on the basis of international standards.

To strengthen the stability of lending institutions, it is proposed to establish as of Jan. 1, 2012 minimum capital requirements for newly created banks, and as of Jan. 1, 2015, minimum own assets (capital) for functioning banks at 300 million roubles.

In the medium term, it is proposed to reduce government participation in the capital of lending institutions, while retaining control over the activities of OAO Sberbank of Russia, OAO Bank VTB and OAO Rosselkhozbank. As part of the work to improve the deposit insurance system, the case will be considered for expanding the range of subjects covered by protection under the natural person insurance deposit system by including individual entrepreneurs without a legal entity status.

To implement the international approach to financial regulation, the deadlines are set for introducing the Basel bank supervision committee’s (Basel II and Basel III) new regulatory standards.

Under the draft strategy, the banking sector may achieve the following performance indicators by late 2015: assets/GDP over 90% (74.5% as of Jan. 1, 2011); capital/GDP 14-15% (10.4%); loans to non-financial organisations and natural persons/GDP, 55-60% (41%).

The draft strategy also contains a plan of activities envisaging the adoption of regulatory acts to facilitate the solution of the problems and tasks identified in the draft strategy.

2. Draft federal law On Introducing Amendments to the Federal Laws On Banks and Banking Activities and On the Central Bank of the Russian Federation (Bank of Russia)

The draft federal law has been submitted by the Ministry of Finance. The draft law’s aim is to harmonise the legislative framework of consolidated supervision and information disclosure by lending institutions, bank groups and bank holdings with current international practices in the field.

In connection with the draft law, concepts are introduced of direct and indirect control, direct and indirect substantial influence, persons linked with the lending institution, and the concepts of a banking group and a banking holding are updated. Among other things, it is proposed that the description of a banking group be applied also to an association of legal entities under direct or indirect control or the substantial influence of a single lending institution and that the share of banking in the activities of a banking holding should be no less than 40%.

The draft law would put a legislative seal on the basic principles of interaction between the Bank of Russia and federal executive bodies in supervising the activities of banking groups and banking holdings and update the powers of the Bank of Russia in terms of consolidated supervision procedures.

Furthermore, the draft law updates the list of items in individual reports of lending institutions and consolidated reports of banking groups and banking holdings compiled for submission to the Bank of Russia for supervisory purposes, as well as subject to publication in the general press.

According to the Bank of Russia, as of Jan. 1, 2011, the 149 banking (consolidated) groups and 33 banking holdings operating in the Russian Federation included 224 lending institutions whose share in the consolidated assets of the banking sector was about 86%. Thirty groups include two or more lending institutions, 119 groups were formed on the basis of one lending institution that is the head institution, and non-lending institutions. In all the groups, banking is the core activity.

3. Draft programme of the commercial power metering system development on the basis of “smart meters” in power grid organisations

The programme’s main goals are:  

  • to reduce the specific energy consumption level by stimulating energy saving by consumers;
  • to reduce commercial and technical energy loss through the prompt detection and containment of such losses;
  • to make retail electricity market more transparent by forming complete and accurate energy balance sheets;
  • to enhance the reliability of the power supply in the Russian Federation by organising the monitoring of energy system parameters.

The programme envisages the solution of the following key tasks:

  • the formation of a comprehensive and effective system of electrical energy commercial and technical accounting through the use of smart meters;
  • the prompt detection and reaction of energy supply organisations to malfunctions and technological irregularities;
  • forecasting and mitigating power consumption peaks;
  • enhancing the retail power market’s operational efficiency by reducing running costs;
  • enhancing the effectiveness and quality of power network development planning by creating an energy profile and forecasting its development for network segments;
  • greater transparency and timeliness of payments for power resources;
  • stimulating the development of innovative product and software production on the territory of the Russian Federation;
  • introducing the necessary amendments to the legal framework.

The programme will be implemented over ten years (2011-2020).

The programme will be implemented in stages.

Stage I (2011-2012) is the preparatory stage -- stimulating the market to use smart meters, forming a smart metering concept, testing technologies during the course of pilot projects.

Stage II (2012-2015) is the transition stage – introducing changes to legislation and creating new smart metering systems. Based on the results, Stage III measures may be revised.

Stage III (2016-2020) will see a massive spread of smart metering technologies.

Based on the results of Stage I, a federal concept and a targeted model of smart power metering will be formed, a detailed assessment of the cost of implementing Stages II and III will be made and the sources of financing will be identified.

The primary results of the programme’s implementation will be as follows:

  • creating technical opportunities for choosing the power supply tariff, remote reading of meters, and the formation and analysis of power consumption profile for 90% of power consumers;
  • a 25% cut in the total losses of power in the process of its transmission to the end user;
  • a 10% cut in the average duration of power cuts;
  • a 30% reduction in the number of complaints filed by end consumers with energy supply organisations;
  • a 10% cut in power consumption per unit.

4. Progress in the fulfilment of federal targeted programmes and the implementation of the Federal Targeted Investment Programme in 2010

5. Draft federal law On Introducing Amendments to Certain Legislative Acts of the Russian Federation for the Purpose of Improving the Mechanism of Ensuring Export Credits and Investments Against Commercial and Political Risks

The draft federal law has been submitted by the Ministry of Economic Development.

The draft federal law has been developed to secure the activities of an open joint stock company in ensuring export credits and investments against commercial and political risks created pursuant to the decision of the Vneshekonombank supervisory board and envisages changes, including:

  • more precise definition of Vneshekonombank’s functions in ensuring export credits against commercial and political risks by creating a joint stock company and setting the procedure of government regulation of these activities;
  • the law On the Organisation of Insurance in the Russian Federation does not apply to the activities of insuring export credits and investments against commercial and political risks;
  • granting tax benefits for insurance, co-insurance and reinsurance of credits and investments against commercial and political risks in calculating the value added tax as well as in reducing the taxable base of participants in foreign economic activities in calculating the profit tax.

The draft law envisages the adoption of a government regulatory legal act on the procedure for conducting activities to insure export credits and investments, including the requirement for the financial stability of organisations, supervision and control over their activities, and defining the forms, conditions and procedures for granting financial support.

6. Draft Federal Law on Introducing Amendments to the Federal Law On the Mandatory Original Copy of Documents

The draft federal law has been submitted by the Ministry of Communications and Mass Media. The draft proposes an increase in the number of mandatory copies of books, brochures, journals and ongoing publications sent by the producers of documents to the Russian Book Chamber. This would make it possible to include St Petersburg State University’s Science Library in the list of library and information organisations receiving a mandatory original copy of documents (approved by the Culture Ministry).

In addition, the amendments to the federal law On the Mandatory Copy of Documents eliminate inherent conflicts and differences from the provisions of the Federal Law On the Protection of the Rights of Legal Entities and Individual Entrepreneurs in the Process of State Control (Supervision) and Municipal Control.

 

7. Draft Federal Law on the Ratification of the 8th Additional Protocol to the Constitution of the Universal Postal Union adopted by the XXIV Congress of the Universal Postal Union

The draft federal law has been developed and introduced by the Ministry of Foreign Affairs and the Ministry of Communications and Mass Media.

The 8th Additional Protocol to the Constitution of the Universal Postal Union was signed on Aug. 12, 2008 in Geneva, Switzerland.

The protocol introduces amendments to the 1964 Constitution of the Universal Postal Union aimed at harmonising the terminology used, improving the acts of the UPU and making the management system more transparent and improving the UPU’s methods.

The primary amendments concern the replacement of the terms “postal administration” and “country” with the term “member-country” (Section

 1.4, Article I) and the introduction of the term “designated operator” (Section 1.7, Article I). In addition, the protocol establishes a number of concepts such as “postal service”, “free transit” and “international postal service”.

The protocol is subject to ratification pursuant to Subsection A, Section 1-2 of Article 15 of the Federal Law on the International Treaties of the

Russian Federation. 

8. Draft Federal Law on the Accession of the Russian Federation to the Convention on the Civil and Legal Aspects of the International Abduction of Children

The draft federal law has been submitted by the Ministry of Foreign Affairs and the Ministry of Education and Science.

The draft law is aimed at the accession of the Russian Federation to the Convention on the Civil and Legal Aspects of the International Abduction of Children signed at The Hague on Oct. 25, 1980.

The convention is aimed at ensuring the prompt return of children illegally moved to any of the contracting states or illegally held in any of these states, as well as at ensuring the effective compliance by other contracting states with the rights of guardianship and access stipulated by the laws of one contracting state.

Because numerous incidents have recently been revealed of children being taken illegally out of the Russian Federation or failing to return to the Russian Federation, as well as one parent living outside the Russian Federation denying the other parent, who is a citizen of the Russian Federation, the opportunity to communicate with the child and to take part in its upbringing, the issue of the country’s accession to the convention is highly relevant, especially as the Russian Federation does not have bilateral agreements on mutual legal assistance on civil cases with many of the states where the children being citizens of the Russian Federation are held.

The accession to the convention will be an effective preventative measure that will reduce the number of abductions of children and guarantee their rights and legitimate interests.  

9. Draft Federal Law on the Abrogation of the European Convention on the Protection of Archaeological Heritage

The draft federal law has been submitted by the Ministry of Foreign Affairs and the Ministry of Culture.

The draft federal law renounces on behalf of the Russian Federation the European Convention on the Protection of the Archaeological Heritage signed in London on May 6, 1969, to which the USSR acceded in 1990.

On behalf of the Russian Federation, a European Convention on the Protection of Archaeological Heritage (revised) was signed in Valetta on Jan. 16, 1992. To take part in that convention (in accordance with Section 2, Article 14), the participating states are required to abrogate the European Convention On the Protection of Archaeological Heritage signed in London on May 6, 1969 simultaneously with its ratification.

The law’s adoption would not require the annulment, suspension, amendment, or introduction of additions, or the adoption of any other federal legislative acts or acts of the president and the Government of the Russian Federation.

10. Draft Federal Law on the Ratification of the European Convention on the Protection of Archaeological Heritage (revised)

The draft federal law has been submitted by the Ministry of Foreign Affairs and the Ministry of Culture.

The draft federal law on behalf of the Russian Federation ratifies the European Convention on the Protection of Archaeological Heritage (revised) signed in the city of Valetta on Jan. 16, 1992.

11. Draft Federal Law on Introducing an Amendment to Article 226 of the Labour Code of the Russian Federation

The draft federal law has been submitted by the Ministry of Healthcare and Social Development.

It is aimed at improving the financing of occupational safety measures.

In accordance with Article 37 of the Constitution, everyone has the right to work in conditions meeting safety and hygiene requirements.

Article 212 of the Labour Code makes the employer responsible for occupational safety and health.

Article 226 establishes that the funding of measures to improve occupational safety by employers (with the exception of state unitary enterprises and federal institutions) should amount to no less than 0.2% of the cost of producing goods and rendering services.

However, a standard list of occupational safety and health measures to be taken by the employer does not exist. In this connection, some employers use the money allocated to finance occupational safety and health to finance activities unrelated to the improvement of occupational safety and health.

The draft law would add to Article 226 a provision whereby the standard list of measures to improve occupational safety and health and reduce occupational risks annually taken by the employer at the expense of the sums referred to is fixed by the federal executive body charged with the developing a national policy and legal regulation in the sphere of labour.

12. Draft Federal Law on Introducing Amendments to Certain Legislative Acts of the Russian Federation in Connection with the Improved Procedure of Alternative Civilian Service

The draft federal law has been submitted by the Ministry of Healthcare and Social Development.

Pursuant to Article 23 of Federal Law No. 113-FZ On Alternative Civilian Service, a citizen shall be dismissed from alternative civilian service if the military and medical commission declares him unfit for military service or fit for military service with reservations.

However, citizens in alternative civilian service are not registered at the local draft centre while performing alternative civilian service, which denies them the opportunity of having free medical certification at medical and other institutions of federal executive bodies with military and medical commissions.

The draft law would establish that citizens performing alternative civilian service are subject to be registered at their local draft stations. That would make it possible, when necessary, to administer medical certification to determine if they are physically fit for military service.

Furthermore, the draft law will regulate issues connected with the death of a citizen while performing alternative civilian service by adding to Article 23 of Federal Law No. 113-FZ a provision whereby in the event of the citizen’s death in a location other than his permanent place of residence, the coffin with the body of the deceased would be delivered by the employer to the burial place chosen by the relatives.

The cost of delivering the coffin with the body of a person deceased during the period of his performance of alternative civilian service would be compensated by the federal budget under a procedure determined by the Government.

13. Coordinating Council for Veterans Affairs under the Government of the Russian Federation

The draft resolution has been submitted by the Ministry of Healthcare and Social Development.

The draft envisages the formation of a Coordinating Council to ensure interaction between federal executive bodies, executives of constituent entities of Russia and non-governmental organisations on matters of state policy with regard to veterans. A Statute on the Coordinating Council will be approved.

In accordance with the draft statute, the chairman of the Coordinating Council is the prime minister.

The Coordinating Council’s primary tasks are as follows:

 

 

  • preliminary consideration and expert assessment of proposals aimed at improving federal and regional legislation on the social protection of veterans;
  • consideration of ways to improve the social and economic position of veterans, enhancing the quality and making more accessible social support and government services;
  • assessment and dissemination of the experience of constituent entities of the Russian Federation in improving the social and economic conditions of veterans and other tasks.

The Coordinating Council will consist of representatives of federal executive bodies, the Federal Assembly, a number of constituent entities of the Russian Federation, and veterans’ associations.

14. Submitting to the president of the Russian Federation for introducing for subsequent ratification Protocol No. 5 between the Russian Federation and the Republic of Armenia on introducing amendments to the treaty between the Russian Federation and the Republic of Armenia on the Russian military base on the territory of the Republic of Armenia of March 16, 1995

The draft resolution on submitting to the president of the Russian Federation for introducing for subsequent ratification Protocol No. 5 between the Russian Federation and the Republic of Armenia on introducing amendments to the treaty between the Russian Federation and the Republic of Armenia on the Russian military base on the territory of the Republic of Armenia of March 16, 1995 has been submitted by the Ministry of Defence and the Ministry of Foreign Affairs.

The draft’s aim is to propose the approval of the above protocol and the submission of the same to the president for the purpose of introducing the document for ratification by the State Duma.

The protocol extends to 49 years the initial effective period of the treaty between the two countries on the Russian military base on Armenian territory.

Under the protocol, the Russian military base, during its mission on the territory of Armenia, in addition to protecting the interests of Russia, ensures Armenia’s security jointly with the Armed Forces of the Republic of Armenia.

To achieve these goals, the Russian side will interact with the Armed Forces of Armenia in providing them with modern and interoperable arms and military (specialised) equipment. 

15. State metrological supervision

The draft resolution has been submitted by the Ministry of Industry and Trade.

The draft resolution has been prepared on the basis of:

  • Part 2, Article 16 of the Federal Law On Ensuring Uniform Measurements;
  • Subsection A, Section 2 of the Presidential Decree On State Metrological Supervision in the Field of Defence and ensuring the Security of the Russian Federation;
  • the relevant instructions of the Government of the Russian Federation.

Under Part 2, Article 16 of the federal law, the procedure of supervision, the interaction of federal supervisory executive bodies and the distribution of powers between them are established by the president or the Government of the Russian Federation within their respective scope of authority.

As of today, that provision is only partially implemented.

Under Section 1 of the Presidential Decree On State Metrological Supervision in the Field of Defence and Ensuring the Security of the Russian Federation, the authority to implement state metrological supervision in the field of defence and security rests with the Ministry of Internal Affairs, Ministry for Emergencies, Ministry of Defence, External Intelligence Service (SVR), Federal Security Service (FSB), Federal Guard Service and Main Directorate for Special Programmes (GUSP). The supervision procedure on the part of these bodies will be determined by the Government of the Russian Federation (Subsection A,  Section 2).

On the strength of the above, the draft resolution envisages the approval of the Statute on State Metrological Supervision establishing the supervision procedure by federal executive bodies and their interaction.

The statute regulates the actions of officials, and is aimed at making control and supervisory measures more effective, including in the field of energy supply, at avoiding accidents in hazardous production facilities and fuel and energy enterprises, as well as defence and security enterprises.

The statute also specifies the object of inspections, enumerates supervisory measures, establishes norms for supervising compliance in accordance with federal law to meet mandatory requirements, and to ensure that the quantity of goods in packages does not deviate from the stated value.

The supervision of compliance with mandatory requirements in the sphere of the state regulation of measurement uniformity will be the responsibility of Rosstandart and its territorial bodies, and in the field of defence and security, of the federal executive bodies authorised by the president of the Russian Federation. Supervision will comply with the federal laws On Ensuring the Uniformity of Measurements, On the Protection of the Rights of Legal Entities and Individual Entrepreneurs in the Process of State Control (Supervision) and Municipal Control and the Statute on State Metrological Supervision.

The supervisory bodies in the field of defence and security (in addition to the above normative legal acts) will be guided by the acts they adopt with the approval of the Ministry of Trade and Industry. These acts will take into account the specificities of ensuring uniform measurements in the state’s defence and security activities.

Supervisory bodies will appoint officials authorised to conduct supervision.

Interaction between supervisory bodies is governed by the Federal Law On the Protection of the Rights of Legal Entities and Individual Entrepreneurs in the Process of State Control (Supervision) and Municipal Control.

The draft resolution will instruct the Ministry of Trade and Industry to develop and approve methods of selecting packed goods samples for inspection and for determining the deviation of the actual quantity of packed goods from the declared value.

Rosstandart shall coordinate the supervisory activities of the federal executive bodies authorised by the president of the Russian Federation. Rosstandart will perform this function within the limit of the size of the staff of the central apparatus and territorial bodies of the agency set by the government, as well as within the budget allocations stipulated under the federal budget for managing the fixed sphere of activity.

The draft resolution will delete from the statute on the Rosreestr the function of supervision in the field of geodetic and cartographic activities (the field will be supervised by Rosstandart) and annul the government resolution On Approving the Statute on the Organisation and Implementation of State Control and Supervision in the Field of Standardisation, Ensuring Uniform Measurements and Mandatory Certification.

16. Organising activities connected with the establishment of heraldic signs of federal executive bodies run by the Government of the Russian Federation and introducing amendments to certain acts of the Government of the Russian Federation

The draft resolution has been submitted by the Ministry of Justice.

The draft is aimed at simplifying the procedure for approving heraldic signs by delegating the function to federal executive bodies.

The draft would allow federal executive bodies reporting directly to the Government but having no heraldic signs to establish their heraldic signs and heraldic signs of their subordinated federal executive bodies with the approval of the Heraldic Council under the President of the Russian Federation, unless otherwise provided for by federal law.

With regard to federal executive bodies reporting directly to the government that already have heraldic signs approved by government resolutions, the draft resolution recommends introducing amendments concerning the procedure for establishing such signs.    

17. Allocation to the Government of the Republic of Dagestan  funds from the Reserve Fund of the Government of the Russian Federation for the Prevention and Liquidation of Emergency Situations and the Aftermath of Natural Disasters to cover the cost of compensating the damage caused when legitimate actions were taken to quash a terrorist attack in the town of Kaspiisk on Sept. 29, 2010

18. Allocation to the Government of the Republic of Kabardino-Balkarian Republic funds from the Reserve Fund of the Government of the Russian Federation for the Prevention and Liquidation of Emergency Situations and the Aftermath of Natural Disasters to cover the cost of compensating the damage caused when legitimate actions were taken to quash a terrorist attack in the city of Nalchik on Aug. 27, 2010

19. Allocation to the Government of the Republic of North Ossetia-Alania  funds from the Reserve Fund of the Government of the Russian Federation for the Prevention and Liquidation of Emergency Situations and the Aftermath of Natural Disasters to liquidate the consequences of a terrorist attack perpetrated in the city of Vladikavkaz on Sept. 9, 2010 

Moscow

March 16, 2011

* Press releases by the Department of Press Service and Information contain materials submitted by the executive federal bodies for discussion by the Presidium of the Government of the Russian Federation