After a decade of waiting, the Russian Duma has finally passed the deposit insurance bill in the first of three readings, restarting the stalled banking reforms.

The Central Bank of Russia (CBR) had promised to have the deposit insurance scheme, which should go some way to breaking retail titan Sberbank’s virtual monopoly over household deposits, running by the start of 2002. But wrangling over the centrepiece of Russia’s beleaguered banking reform has held up the bill in committees for most of the past 18 months.

Analysts have suggested that some commercial banks were blocking the bill because they would not clear the capital and reporting hurdles it imposes. Any bank that does not meet the requirements will automatically lose its retail banking licence.

The draft law says that 100% of deposits up to Rb20,000 ($656) will be returned, and 75% of the next Rb100,000, if a bank in the scheme fails. Depositors with larger sums in accounts of a dud bank will have to join the queue of creditors to recover the rest. The Economic Development and Trade Ministry estimates that these thresholds cover 90% of accounts in Russia.

The scheme will be introduced in tandem with administrative changes to improve the implementation of regulations. Banks ignore many rules but in September the CBR said it was publishing new rules for imposing tighter supervision on commercial banks to bring its controls into line with international practices.

Richard Hainsworth, bank analyst at Renaissance Capital, said: “The passage of the bill is positive and a highly symbolic step for bank reform in Russia. Given the fights expected over the finer details of the legislation in second reading, and the truncated Duma session [because of elections], there is very little chance of the bill passing into law before the spring session. However, after that we could finally see this reform move forward.”

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