Russia » Economics

Russian Banks See Potential of Small Business Market at USD 7 Billion - 7 March, 2003

The current potential volume of the Russian small business market is about USD 7 billion, according to Gagerin Tosunyan, the president of the Association of Russian Banks (ARB). Tosunyan was speaking yesterday at a round-table discussion on 'The financial foundations for the development of small business.' 'Even in the current state of the economy we can't meet the market's requirements for small businesses. Realistically we can only give USD 1 billion at the most,' he said.

According to Tosunyan, there are currently 6 small businesses in the country for every 1,000 people and 'of these maybe three are functioning,' whereas in EU countries there are 40-60 such businesses per 1,000 people. In Moscow there are 20 small businesses per 1,000 people, 'although in reality the number of functioning businesses is only half as high.'

Tosunyan believes that the main problem regarding small business development is 'the high cost of bank loans and the bureaucracy involved in receiving them.' 'This is not the fault of the banks, but of the whole credit system,' he said. 'Over the last few years we have been trying to show that bankers are not currently growing fat. Our profit margin in the banking market is only 2-3%. Today the banking community is working not only in the interests of the banking system, but also in the interests of society. We are looking at developing refinancing, reducing the compulsory reserve fund, and ensuring access for banks to the state pension fund.'

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