June 29, 2009

Putin calls for banks to increase lending

Russian Prime Minister Vladimir Putin called on banks to increase lending by $16 billion this year to combat a sluggish economy and tightening credit.

I am asking the heads of financial institutions to control this situation and not to plan any summer holidays until the moment that this has been dealt with as it should, Putin said.

Putin pressed for increased lending despite rising loan defaults in Russia, which have reached 6 percent at VTB, the country's second-largest state-controlled lending institution, Financial Times reported Monday.

I know the fear about the growth in bad loans, Putin said. But I suggest that the less lending goes on, the greater the risk is that loans won't be returned, because by ceasing credit, you are strangling the real sector, he said.