By the end of 1995, Russia had nearly 3,000 commercial banks. However, most of these banks were small and had little capitalization. A large portion of them are financially linked to companies and act exclusively as conduits of subsidized credits to these enterprises. The financial health of such institutions is highly questionable, and experts forecast that many of them will merge into larger, more viable institutions or go bankrupt as the RCB continues to tighten its requirements and as the role of cheap credits diminishes.
The commercial banking system has a core of large, viable banks that have attained financial credibility and that experts expect to remain in operation under any foreseeable economic conditions. The former state-controlled specialized banks of the Soviet system form the foundation of the current commercial banking system, including the six largest commercial banks in Russia. In 1991 three of the banks--the Agroprombank (subsequently renamed Rossel'bank), the Promstroybank, and the Zhilsotsbank (reorganized into Mosbusinessbank)--were reorganized into joint-stock companies and became independent commercial operations, forming the foundation of the commercial banking system.
The Soviet-era Savings Bank (Sberbank) was reorganized as the Sberbank of Russia, with the RCB holding controlling shares. In 1996 the Sberbank held between 60 and 70 percent of Russians' total household savings; that figure decreased from 90 percent in 1991 as other commercial banks began to provide competition. The Foreign Trade Bank (Rosvneshtorgbank) also remains state-controlled, and it continues to handle most foreign transactions, although by the mid-1990s it received competition from newer, privately owned banks. The Moscow International Bank handles business between the large Russian banks and Western banks. Sberbank and Rossel'bank have systems of nationwide branches.
The types and quality of services that the Russian banking system offers to the public are still rudimentary according to the standards of Western industrialized countries. They are unable to offer diverse and efficient customer services because the Soviet Union had no retail banking tradition and because Russia lacks the sophisticated infrastructure, especially high-speed telecommunications and trained staffs, on which modern Western financial institutions depend.
Most of the commercial banks offer their customers savings deposit accounts, and the more established banks provide foreign-exchange services, investment services, and corporate services. Bank checks are still rarely used in Russia because check clearance is a long process. Some banks offer debit cards that allow customers to have payments for goods and services deducted directly from their bank balances. Some banks also offer credit cards to customers with impeccable credit ratings. The continued predominance of cash transactions has slowed the rate of Russia's commerce.
Although foreign banks have played a larger role in the Russian economy in the mid-1990s, that role has met substantial resistance from nationalist factions. In early 1996, the State Duma passed a statute prohibiting the RCB from licensing foreign banks that did not have operations in Russia before November 1993. However, opponents of such a policy have pointed out that efforts to protect the fledgling domestic banking sector from foreign competition also deny access to Western financial techniques that eventually would improve the competitiveness of Russian banks.