Russian Federation - Convincing regional networks

The DGRV has been supporting the building-up of savings and credit cooperatives (SCC) in the Russian Federation since 1998. Alongside the Central Bank, the Ministry of Finance, and the Ministry of Agriculture, the DGRV played a prominent role in the adoption of a federal cooperative law. Additionally, the DGRV assisted the National Federation of Rural Credit Cooperatives in Russia in the conceptual design of a three-tier cooperative financial structure, amongst other things.
The national federation pursues a strategic development plan based on regional networks between cooperative primary societies, i.e. cooperation between legally autonomous and economically independent businesses with operations primarily in the rural and sub-urban regions. In their respective regions, the local SCCs establish a secondary institution to support and supplement their own activities. These regional institutions also function as the link to the national structures. All organizational levels together form the cooperative financial network; it is based on a division of labour between them with support from the members. In parallel to this financial structure, a two-tier federational organization, consisting of regional federations and the national federation, supports the SCCs and their members.
Volgograd Oblast has spearheaded the development of regional networks across the country. The SCC sector, which has been growing steadily and strongly for more than 11 years, has considerably improved the financial service situation in the rural areas. The regional SCC network, which was supported by the DGRV first under the German government’s "Transform" programme and later the BMZ, functions as a pilot project.
The growth rates in this sector are impressive: at the end of 2006, 67 registered SCCs had been established with slightly less than 200 bank outlets and more than 500,000 members. The lending volume, which had been increasing steadily during the last years, amounted to some 1.2 bn Roubles (approx. 34 m Euros) in 2006. Approx. 70 per cent of it comes from savings deposits. Loans are mainly used for production purposes in agriculture and small and medium-sized enterprises and auxiliary plants. Savings and credit cooperatives therefore make a crucial contribution to the economic development in the region.
DGRV consultancy and support is provided for credit banking and deposit management (credit and deposit manuals, application training), regulations concerning standards, ratios, data collection and evaluation, internal control and auditing.
The know-how and experience gathered in the Volgograd region is increasingly being made available to other areas of the Russian Federation through the national organizations. This reflects the high level of acceptance and sustainability of DGRV consultancy services.