→ What is the "RF Central Bank refinancing rate"?

What is the "RF Central Bank refinancing rate"?

What is the refinancing rate in simple terms?

The refinancing rate is the amount of interest on an annualized basis payable to the Bank of Russia for loans that it has provided to credit institutions. Simply put, it is the interest rate at which the Central Bank provides loans to commercial banks and other financial institutions. From September 14, 2012, the refinancing rate is 8.25%.

In practice, everything happens as follows: a commercial bank takes, say, 100 million rubles from the Central Bank. In a year, he is obliged to return the amount borrowed, plus the interest that has accumulated during this time at this same refinancing rate, that is, 108.25 million.

During this year, a commercial bank provides loans to individuals and legal entities, of course, at a higher percentage than the refinancing rate, making a profit.

What is refinancing?

Refinancing itself is a process during which the borrower pays the lender a previously received (outstanding) loan with the help of a newly attracted cheap short-term loan. Refinancing allows the borrowing bank to solve the following tasks:

• reduce your expenses by attracting a new loan on more favorable terms;
• reduce lending rates for clients, increasing their competitiveness;
• extend the loan term, delay payment;
• additional loans are additional resources for commercial banks for lending to clients.

Where does the refinancing rate apply?

• When taxing income from deposits. In accordance with the Tax Code of the Russian Federation, the tax rate is set at 35% in respect of interest income on bank deposits, in terms of exceeding the amount calculated taking into account the refinancing rate. Personal income tax (PIT) is levied on interest that exceeds the refinancing rate by more than 5 percentage points. Payments to the state are made by the bank.
• When calculating the amount of interest for late payment of taxes and other deductions in favor of the state. In accordance with the current Tax Code, the interest rate of interest is set at 1/300 of the refinancing rate of the Central Bank of the Russian Federation.
• When calculating the liability of the employer for delayed wages, vacation pay and other payments due to the employee by law. In accordance with the Labor Code of the Russian Federation, in this case, the employer is obliged to pay the employee monetary compensation in the amount of 1/300 of the refinancing rate of the Central Bank of the Russian Federation of the amounts unpaid on time for each day of delay.

Here's how the refinancing rate has changed in recent years:

They learned what the refinancing rate is in Russia in 1992. Then it was set at 20%. However, at this level, she was able to hold out for a very short time, starting to grow rapidly.

The refinancing rate reached its historical maximum in 1993 - then it was set at 210 (!)%. The minimum value of the rate - 7.75% - was established on June 1, 2010. At this level, it held out until the beginning of 2011.

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To deal with the concept of "refinancing rate" you must first give an answer to the question "what is refinancing?" Article 40 of Federal Law No. 86-FZ "On the Central Bank of the Russian Federation (Bank of Russia)" dated July 10, 2002, specifies that refinancing means lending by the Bank of Russia to credit institutions.

Refinancing itself is a process during which the borrower repays the previously received (already existing) loan with the help of a new loan. The purpose of the borrower in refinancing, as a rule, is to solve the following problems:

• obtaining a new loan on more favorable terms, for example at a lower rate, which allows the borrower to reduce their costs. And at the same time, it enables banks to change the rates of lending to clients.


• obtaining a new loan in order to extend the loan term. Central Bank loans for commercial banks are additional resources for lending to customers.

However, on September 13, 2013, the Board of Directors of the Central Bank of the Russian Federation made a historic decision to implement a set of measures to improve the instruments of the monetary policy system, according to which the role of the refinancing rate has changed. Now it is of secondary importance and is indicated for information only. The Bank of Russia now exerts its main influence on monetary policy through key rate about which you can see >>

"Refinancing rate" - definition and concept

Now we can define the “refinancing rate” and answer the question “what is the refinancing rate?”:

Refinancing rate of the Central Bank of the Russian Federation- This is the interest rate that the Central Bank of the Russian Federation uses when granting loans to commercial banks in the order of refinancing.

It is assumed that refinancing rate, this is the rate formed by the market for some of the most active operations of the Central Bank, and is used for interaction with commercial banks. Today the refinancing rate is a kind of “contractual” mechanism for identifying the average cost of money and is used primarily for fiscal purposes. In fact, the refund rate is not an instrument that reflects the market nature of transactions. And it is only needed to understand the value of money, since in a market economy you cannot do without it. The value of the refinancing rate can be established (identified) by competitive selection, or it can be simply appointed.

The refinancing rate is also a “kind” accompanying mechanism for curbing inflationary processes in Russia. With a decrease in inflation, the refinancing rate also decreases. Thus, when by the end of 2005 the inflation rate was 11.8%, the refinancing rate of 2005 dropped to 12%, and by the end of 2006, when inflation dropped to 9%, the refinancing rate of the Central Bank was lowered to 11.0%. And then in 2007 up to 10.5%, and 10.00%. But already from the beginning of 2008, the refinancing rate began to rise: first to 10.25%, then to 10.50% and 10.75%. This was a signal that inflation is above the set parameters and continues to increase, and the Government and the Central Bank are taking measures to contain it. Since the beginning of the global financial crisis, the refinancing rate of the Central Bank of Russia for 2008 has increased three times more. As of mid-December 2008, the Central Bank rate is 13%, and the inflation forecast is 13.8%.

And already in 2009 Russia finished with inflation of 8.8% (data from Rosstat), and a refinancing rate of 8.75%. During 2009, the rate was reduced 10 times, which was aimed at stimulating the lending activity of banks, at curbing inflationary processes and economic growth.

Based on the foregoing, it can be stated that the Central Bank of Russia rate is a tool with which the Bank of Russia influences interest rates on deposits and loans provided by credit institutions to legal entities and individuals. Therefore, in their interest rate policy, commercial banks are largely guided by, and sometimes depend on, the rate of the Central Bank of Russia.

Do they influence changes in the refinancing rate on the financial situation of the population? Yes, they do! In a situation when the Central Bank's rate goes down, on the one hand, borrowers will benefit, and on the other hand, depositors of Russian banks lose, losing part of the profit from their investments. Each change in the refinancing rate is a messenger of the fact that in the near future, changes (revisions) by commercial banks in interest rates on deposits and loans are possible. An analysis of the formation of interest rates on deposits of most of the leading commercial banks in Russia confirms this. The refinancing rate always reaches almost the level of inflation, which means that in addition to reducing profits, interest on most deposits turns out to be below the inflation rate and deposits are gradually depreciating.

Refinancing rate application

Where is applied refinancing rate? I will give several examples of the application of the refinancing rate. So, the Central Bank rate is applied:

• When taxing income from deposits. In accordance with the Tax Code of the Russian Federation (Tax Code of the Russian Federation), interest income on certain types of deposits of individuals is subject to taxation. In accordance with clause 2 of article 224 of the second part of the Tax Code of the Russian Federation, “the tax rate is set at 35% in respect of interest income on deposits in banks, in terms of exceeding the amount calculated on the basis of the current refinancing rate of the Central Bank of the Russian Federation... The tax is calculated during the period for which interest is accrued on deposits in rubles (except for term pension deposits made for a period of at least six months). "


• When calculating the liability of the employer for the delay in the payment of wages. In accordance with Article 236 of the Labor Code of the Russian Federation, if the employer violates the established deadline for the payment of wages, vacation pay, dismissal payments and other payments due to the employee, the employer is obliged to pay them with payment of interest (monetary compensation) in the amount of not less than one three hundredth of the current refinancing rates of the Central Bank of the Russian Federation from the amounts unpaid on time for each day of delay starting from the next day after the due date for payment up to and including the day of actual settlement. The specific amount of monetary compensation paid to the employee is determined by the collective agreement or labor contract.


• When calculating penalties for late fulfillment of the obligation to pay a tax or fee. In accordance with paragraph 4 of Article 75 of the Tax Code of the Russian Federation, the penalty for each day of delay is determined as a percentage of the unpaid amount of tax or due. Interest rate of interest is assumed to be equal to one three hundredth of the refinancing rate of the Central Bank of the Russian Federation in force at that time.

Citizens facing loans should be familiar with the term “refinancing rate”. But not everyone understands its meaning. Many consider this as a percentage for a loan being issued. Therefore, it is worth dispelling the financial illiteracy of the population.

Against the backdrop of booming economic activity in the country, ordinary citizens have become interested in some of its aspects, especially with which they often face. So, many have heard a term like refinancing rate... It is often used in the area of ​​monetary settlement related to borrowed funds. It is this indicator that is taken into account when setting interest on various loans and other deductions. Therefore, it is worth dealing with this.

In simple terms, this is the monetary supply of other banks from the Central Bank of the Russian Federation. The Central Bank lends to various financial institutions, and those of these funds issue loans to their clients. Thus, the Bank of Russia launches the country's monetary reserve into the economy.

The reasons why financial institutions are forced to apply to the Central Bank of Russia for cash loans:

• the need to repay an existing loan with unfavorable conditions;
• the desire to postpone the return of the funds taken for some time due to fresh cash injections.

The name of the rate speaks for itself, because refinancing means the repayment of debt at the expense of a new loan. As a result, the loan remains, but on more favorable terms.

The interest approved by the Central Bank at which it lends money is called the refinancing rate (Article 40 of the Federal Law No. 86 "On the Central Bank of the Russian Federation" dated July 10, 2002).

Example... One commercial bank takes $ 1 million from the Central Bank, which is required to be paid back in a year with interest accrued over this entire period according to the refinancing rate. During the year, the bank from these funds issues loans to individuals and legal entities at its own, more inflated rates. As a result, this brings the bank a certain profit and the Central Bank gets its share.

On the territory of the Russian Federation, the refinancing rate appeared in 1992. Initially, it was equal to 20%, but due to the difficult economic situation in the country at that time, it immediately collapsed to a three-digit value. So, in 1993, the figure was 210%, after which its gradual decline began. The only thing that had a negative impact on this dynamics was the global financial crisis that happened in 1998. Then the rate briefly soared to 150%. The minimum indicator was recorded in 2010 - 7.75%. From June 17, 2019 the Central Bank rate is 7.5%.

Refinancing rate in 2019. Table with rate changes over 27 years

At the moment, the refinancing rate is 7.25%. Below is a table showing the change in the refinancing rate by year:

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We pay for a loan from Renaissance Bank through Sberbank

Validity	Refinancing rate
29.07.2019 —	7,25
17.06.2019 — 28.07.2019	7,50
17.12.2018 −16.06.2019	7,75
17.09.2018 −16.12.2018	7,50
26.03.2018 -16.09.2018	7,25
12.02.2018 -25.03.2018	7,50
18.12.2017 -11.02.2018	7,75
30.10.2017 -17.12.2017	8,25
18.09.2017 -29.10.2017	8,50
19.06.2017 -17.09.2017	9,00
02.05.2017- 18.06.2017	9,25
27.03.2017 - 01.05.2017	9,75
19.09.2016 - 26.03.2017	10,00
14.06.2016 - 18.09.2016	10,50
01.01.2016 - 13.06.2016	11,00
14.09.2012 - 31.12.2015	8,25
26.12.2011 - 13.09.2012	8,00
03.05.2011 - 25.12.2011	8,25
28.02.2011 - 02.05.2011	8,00
01.06.2010 - 27.02.2011	7,75
30.04.2010 - 31.05.2010	8,00
29.03.2010 - 29.04.2010	8,25
24.02.2010 - 28.03.2010	8,50
28.12.2009 - 23.02.2010	8,75
25.11.2009 - 27.12.2009	9,00
30.10.2009 - 24.11.2009	9,50
30.09.2009 - 29.10.2009	10,00
15.09.2009 - 29.09.2009	10,50
10.08.2009 - 14.09.2009	10,75
13.07.2009 - 09.08.2009	11
05.06.2009 - 12.07.2009	11,5
14.05.2009 - 04.06.2009	12
24.04.2009 - 13.05.2009	12,5
01.12.2008 - 23.04.2009	13
12.11.2008 - 30.11.2008	12
14.07.2008 - 11.11.2008	11
10.06.2008 - 13.07.2008	10,75
29.04.2008 - 09.06.2008	10,50
04.02.2008 - 28.04.2008	10,25
19.06.2007 - 03.02.2008	10
29.01.2007 - 18.06.2007	10,5
23.10.2006 - 28.01.2007	11
26.06.2006 - 22.10.2006	11,5
26.12.2005 - 25.06.2006	12
15.06.2004 - 25.12.2005	13
15.01.2004 - 14.06.2004	14
21.06.2003 - 14.01.2004	16
17.02.2003 - 20.06.2003	18
07.08.2002 - 16.02.2003	21
09.04.2002 - 06.08.2002	23
04.11.2000 - 08.04.2002	25
10.07.2000 - 03.11.2000	28
21.03.2000 - 09.07.2000	33
07.03.2000 - 20.03.2000	38
24.01.2000 - 06.03.2000	45
10.06.1999 - 23.01.2000	55
24.07.1998 - 09.06.1999	60
29.06.1998 - 23.07.1998	80
05.06.1998 - 28.06.1998	60
27.05.1998 - 04.06.1998	150
19.05.1998 - 26.05.1998	50
16.03.1998 - 18.05.1998	30
02.03.1998 - 15.03.1998	36
17.02.1998 - 01.03.1998	39
02.02.1998 - 16.02.1998	42
11.11.1997 - 01.02.1998	28
06.10.1997 - 10.11.1997	21
16.06.1997 - 05.10.1997	24
28.04.1997 - 15.06.1997	36
10.02.1997 - 27.04.1997	42
02.12.1996 - 09.02.1997	48
21.10.1996 - 01.12.1996	60
19.08.1996 - 20.10.1996	80
24.07.1996 - 18.08.1996	110
10.02.1996 - 23.07.1996	120
01.12.1995 - 09.02.1996	160
24.10.1995 - 30.11.1995	170
19.06.1995 - 23.10.1995	180
16.05.1995 - 18.06.1995	195
06.01.1995 - 15.05.1995	200
17.11.1994 - 05.01.1995	180
12.10.1994 - 16.11.1994	170
23.08.1994 - 11.10.1994	130
01.08.1994 - 22.08.1994	150
30.06.1994 - 31.07.1994	155
22.06.1994 - 29.06.1994	170
02.06.1994 - 21.06.1994	185
17.05.1994 - 01.06.1994	200
29.04.1994 - 16.05.1994	205
15.10.1993 - 28.04.1994	210
23.09.1993 - 14.10.1993	180
15.07.1993 - 22.09.1993	170
29.06.1993 - 14.07.1993	140
22.06.1993 - 28.06.1993	120
02.06.1993 - 21.06.1993	110
30.03.1993 - 01.06.1993	100
23.05.1992 - 29.03.1993	80
10.04.1992 - 22.05.1992	50
01.01.1992 - 09.04.1992	20

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Features of deposits in foreign currency

Let's display the given data graphically. The schedule of changes in the refinancing rate from 2003 to the present is as follows:

The values ​​of the key rate before 2002 had a higher amplitude of fluctuations, therefore, we put the period from 1992 to 2002 in a separate chart:

How the discount rate affects the economy of the state

The refinancing rate has a certain importance in some economic aspects. Namely:

• Determines the cost of loan proposals for the population. For example, with the existing Central Bank rate of 10%, it will not be possible to take a loan from a bank with a lower interest rate.
• Regulates the inflation rate. So, with an increase in the rate, the cost of the loaned funds will increase. And this, in turn, can lead to depreciation of money and inflationary swings.

Why ordinary people can't borrow money directly from the Central Bank

The Central Bank operates in huge amounts of money, amounting to hundreds of millions of dollars. Therefore, it is not profitable for him to waste his time on trifles.

The infusion of money into the masses occurs through intermediaries, which are various financial structures. This is more rational, since they have an expanded network of branches and bank terminals. So it is easier for ordinary citizens to contact the nearest branch for obtaining certain financial services.

Is it possible for a commercial bank to take a lot of money from the Central Bank at a cheaper rate, and issue loans at a higher price?

In theory, this is possible. But existing competition prevents banks from making too big a difference. If interest rates on loans are too high, the loss of customers is inevitable. As a result, the bank remains in a double loss - there is no profit and there is nothing to later pay with the Central Bank.

In this regard, the rates for loans in most banking institutions differ slightly.

There are exceptions. Here we are talking about companies specializing mainly in consumer loans in large retail outlets, as well as distributing plastic cards by mail. These organizations include:

• Home Credit Bank;
• Alfa Bank;
• Russian standard;
• Renaissance.

Their interest rate can vary from 30 to 70%.

How a certain value of the rate is set

The value of the key rate directly depends on the current economic situation and the rate of inflation. The rate is raised if the inflation indicator jumps and vice versa.

This is how it actually happens. In the event of a decrease in the discount rate of the Central Bank, it becomes more profitable for the population to take out loans due to their reduction in price. After all, you don't have to pay too much for the borrowed money and you can solve your financial problems. Against this background, consumer demand is growing - people are starting to purchase a lot of different goods. This also applies to enterprises that will only benefit from investing extra money in circulation. This arrangement allows you to increase production and get more profit.