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- Spending to help: insurance of irrevocable deposits will be increased to 2.8 million already in 2025.
Spending to help: insurance of irrevocable deposits will be increased to 2.8 million already in 2025.
In Russia, it was decided to increase insurance for savings certificates from three years. The tool is essentially similar to long-term deposits, but money cannot be withdrawn from there during the life of the product. Russians' funds in such instruments will be protected by 2.8 million rubles as early as 2025. This was reported to Izvestia by Anatoly Aksakov, head of the State Duma Committee on the financial market. They have been offering to increase deposit insurance for many years. The amount of 1.4 million was introduced back in 2014, and since then, inflation has been almost 100%. Now people divide their savings between banks to protect their savings. How the new mechanism will work and whether it will help attract long—term money is described in the Izvestia article.
How savings certificates work and what will be changed in them
Insurance of long-term savings of citizens will be doubled in Russia. We are talking about irrevocable savings certificates for a period of three years or more. This tool is an analog to a deposit, the difference is that money cannot be withdrawn from there during the entire life of the product.
Insurance on such certificates will be raised to 2.8 million rubles by the end of 2025, Anatoly Aksakov, head of the State Duma Committee on the financial market, told Izvestia. This mechanism was commissioned by Russian President Vladimir Putin more than a year ago. The bill is currently in the final stretch.
Savings certificates have been around in Russia for decades. Now they are insured in the same way as all other deposits, for 1.4 million rubles, but banks can set conditions for these products at their discretion. Unlike a deposit, it is also impossible to replenish, partially repay or prolong the certificate.
The Bank of Russia supports the initiative to increase insurance on irrevocable certificates, the regulator told Izvestia. They noted that this would help attract long-term money into the economy and reduce the risks of a lack of liquidity in the banking sector.
An increase in the insured amount has been overdue for a long time, experts interviewed by Izvestia believe. The limit of 1.4 million for deposits was set back in 2017, and it needs to be adjusted for inflation in the country, said Vladimir Chernov, analyst at Freedom Finance Global.
— 1.4 million rubles now is about the same amount in real terms as 757 thousand rubles 10 years ago. Raising the limit for at least irrevocable instruments will actually be a minimal adjustment against the background of inflation. This is an important signal that the government is ready to support long—term savings in the national currency," said Vladimir Chernov.
Deposits of Russians are insured for 1.4 million in each credit institution. Even if the client has several deposits in the same bank, the total amount of which exceeds 1.4 million rubles, he will not be able to receive a refund of more than this amount. All banks that have a license from the Central Bank to attract money from individuals are required to participate in the deposit insurance system. Market participants contribute to the fund once every three months. This creates a "safety cushion" from which the Deposit Insurance Agency (DIA) will pay compensation if necessary.
How profitable are savings certificates?
An increase in insurance coverage for savings certificates and an increase in the safety of funds will encourage citizens to make longer-term investments, and will also lead to an expansion in the supply of such a product from banks, the Finance Ministry noted.
The principle of operation of certificates is that the client agrees to make long-term savings without the possibility of partial withdrawal and replenishment of funds. It would be good if he received additional returns in exchange, for example, in 1-2 percentage points, says independent expert Andrei Barkhota.
Raising the limit on insurance of savings certificates to 2.8 million rubles can ensure the flow of cash rubles into deposits in the amount of at least 2 trillion rubles, the economist estimated. In his opinion, the main disadvantage of the tool is the weak mobility of savings. This is the main reason why the consumer of financial services prefers a deposit or a savings account in nine out of ten cases.
However, the money will not be completely locked on the savings certificate. If the depositor needs them ahead of time, the product can be sold as a security to another under a claim assignment agreement, the Central Bank added. Absolut Bank discussed the possibility of allowing early withdrawal of money in certain life circumstances by transferring the deposit rights to another person, said Vitaly Kostyukevich, director of the Retail Products Department.
The advantage for the bank is that an irrevocable deposit is a stable liability that it can use to finance long—term projects and products. The credit institution reduces the risks of outflow of funds and saves on attracting new money to replace those that customers have withdrawn, Vitaly Kostyukevich added.
The savings certificate is suitable for private investors, especially those who are looking for higher returns on low-risk instruments, added Vladimir Chernov from Freedom Finance Global. However, the current situation is such that customer demand is still shifted towards the instrument for up to one year. This is due to the short planning horizon for individuals, the Absolut Bank emphasized.
Banks offer lower rates on long-term deposits than on short and medium-term deposits. The yield on three-year deposits is now less than 10%. Therefore, even with an increase in the savings certificate rate by 1 percentage point for long-term deposits, it will now be difficult for the product to compete with medium-term deposits, Vitaly Kostyukevich warned. However, the situation will change somewhat after the key rate decrease.
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