MOSCOW, November 22 - RAPSI. During its plenary meeting on Wednesday, the State Duma approved a bill on banning the opening of branches of foreign banks in Russia.

The bill "On Amending Certain Legislative Acts of the Russian Federation" has been drafted as part of the strategy to develop the Russian banking sector for the period up to 2015 and consolidates the agreements reached by Russian negotiators during consultations on Russia's accession to the World Trade Organization (WTO).

The bill proposes to exclude branches from the entire definition of the banking system in Russia. The phrase "branches of foreign banks" is excluded from articles on the state registration of credit institutions with foreign investments and with additional requirements for their establishment and activity.

Foreign capital in the Russian banking sector is held in subsidiaries of foreign banks, registered in accordance with Russian legislation.

The explanatory note to the document reads that the functioning of branches is different from the functioning of subsidiaries of foreign banks, since branches are not subject to Russian jurisdiction.

Therefore, branches of foreign banks are not subject to full supervision by regulators, they are not obliged to allot money to obligatory reserve funds, or to report to the Bank of Russia via both the Russian and international accounting systems, nor do they need to submit monthly reports to the Bank of Russia.

The bill's sponsors say that these privileges may reduce the competitiveness of Russian banks.