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. Last Updated: 07/27/2016

Duma OKs CB Law in 2nd Read

The State Duma passed a Central Bank law on its penultimate second reading Wednesday that would curb the bank's powers to supervise the banking system beyond what the government was seeking.

Deputy Prime Minister Alexei Kudrin said an amendment reducing the number of Central Bank audits of commercial banks could be grounds for President Vladimir Putin to veto the bill, which passed 378-2.

The government had asked for the Central Bank to be allowed to carry out three inspections of commercial banks per year, but the amendment called for only two.

"The decision will not allow the Central Bank to implement its function of bank supervision and will weaken the banking system as a whole," Kudrin, who is also finance minister, told the Duma. "This article may be a reason for veto."

But lawmakers agreed with the Cabinet's proposal of a 12-member National Banking Council to be made up of Duma deputies, government and Kremlin officials and a Central Bank representative. Deputies had called for a 13-member council with two Duma seats.

The board of the Central Bank, which maps out guidelines for the country's monetary policy together with the government, will have to inform the council about implementation of these policies on a quarterly basis.

The council will also have the right to veto the Central Bank's annual report and appoint the bank's auditor.

To become a law, the bill must be approved by the Duma in three readings, supported by the Federation Council and signed by the president. The third reading of the document is scheduled for May 24.