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Putin Backs Russian Bank Reform

December 28, 2000 GMT

MOSCOW (AP) _ President Vladimir Putin said Thursday that Russia needs to reform its moribund banks, and criticized the Central Bank for failing to develop the banking system.

The International Monetary Fund and other foreign lenders have long urged Russia to overhaul its banks.

``I would not say that our banking system is functioning properly and that the Central Bank has done its best to develop the banking system,″ Putin told a meeting of regional leaders, according to the Interfax news agency.

But he did not provide any details of what reforms he had in mind.


Putin also criticized regional leaders who want Moscow to obligate the banks to finance impoverished provinces.

``Not a single thrifty manager would spend his money without being sure of getting a return,″ he said.

Economist have said that Russia’s unreformed banking system is still stunting the growth of financial markets more than two years after the 1998 financial collapse.

But so far the government has moved slowly to revamp the banking system. It has infused more cash into insolvent but politically connected banks rather than liquidating them _ a practice that has been criticized by the World Bank.