Stroibank of the Ussr
Stroibank of the Ussr
(All-Union Bank for Financing Capital Investments), the state bank for financing the capital investments made by enterprises and organizations—that is, the enterprises and organizations in industry, transportation, communications, construction, state trade, education, science, culture, public health, housing, and the municipal economy in the USSR—and for financing the construction outlays made abroad as part of the USSR’s technical aid to other countries.
Stroibank was founded in 1922 as the Trade-Industrial Bank (Prombank) under the jurisdiction of the Supreme Council on the National Economy. Initially, it extended short-term credits to industry and trade. In 1926 a long-term credit division was established within the bank and charged with the issuance of long-term loans for the construction and expansion of industrial enterprises. In 1928 the long-term credit divisions of Prombank and Elektro-bank served as the basis on which the Bank for Long-term Credits to Industry and Electricity was organized, a bank that provided industry with both long-term credits and financing out of budgetary appropriations. In 1932 this bank was reorganized as the Bank for Financing Capital Construction, Industry, Transportation, and Communications (Prombank of the USSR) and placed under the jurisdiction of the Ministry of Finance of the USSR. In 1959 the Prombank was given responsibility for the financing of culture and welfare services construction, as well as municipal, housing, and certain other kinds of construction. As a result, it was renamed the Stroibank of the USSR. Since 1961 the Stroibank has been under the direct jurisdiction of the Council of Ministers of the USSR.
The principles of financing capital investments, the organizational system of control over such investments, and the bank’s rights and duties are set forth in the Construction Financing Rules, the Construction Contract Rules, and the Charter of the Stroibank of the USSR, which are ratified by the government of the USSR and which are binding on all enterprises, construction projects, economic and construction organizations, and bodies superior to such organizations.
Capital investments are financed out of state budget funds, the accruals of enterprises and economic organizations, internal construction resources, and long-term bank credits. These assets are kept and accumulated in accounts in the Stroibank of the USSR, which in terms of volume of operations is the largest investment bank in the world. The economic reform carried out in the USSR in the mid-1960’s has brought significant changes in the structure of sources of capital investment financing. Before 1966 budget funds accounted for about 60 percent of total capital investments; since 1966 the enterprises” own assets and long-term bank credits have accounted for over 60 percent of total capital investments.
New construction projects with payback periods not exceeding five years and enterprises to be modernized and enlarged regardless of payback period are financed out of the internal resources of the ministries, agencies, production associations, combines, and enterprises; if these resources are inadequate, long-term bank credit may be obtained. Monetary resources are extended only for the construction sites and projects included in the plans for national economic development and only on condition that such resources are assured by confirmed projections and estimates. Payment for work performed, equipment, components, and materials is made only if the requirements specified in the construction contracts and economic supply agreements have been observed.
The Stroibank grants short-term credits to contract organizations engaged in construction and equipment installation, primarily for the formation (within plan limits) of reserves of material assets and for outlays on unfinished construction. Enterprises and new construction projects entitled to place orders with subcontractors are given credit primarily for outlays on equipment acquisition. The Stroibank also has the responsibility of extending credit for residential construction carried out by individual citizens and by cooperative organs, such as residential construction cooperatives. As many as 10 percent of all dwellings in the country are built with the aid of bank credit.
For its financing, credit, and accounting operations, the Stroibank is allotted the requisite monetary resources in the form of funds; a charter fund of 250 million rubles, a reserve fund of 250 million rubles, an equipment credit fund of 800 million rubles, a long-term credit fund of more than 10 billion rubles, a fixed assets fund, and an amortization fund. The size of the long-term credit fund is fixed annually depending on the planned volumes of long-term credit. The bank operates on the basis of khozraschet (profit-and-loss accounting) and is called upon to exercise “control by the ruble” for the proper and efficient use of funds allotted for capital investments and for the fulfillment of construction plans and targets with respect to putting production capacities into effect.
The Stroibank of the USSR is a single centralized system. Its work is directed by its Executive Board, which is appointed by the Council of Ministers of the USSR. It controls an extensive network of institutions: offices in the Union republics, autonomous republics, krais, and oblasts, as well as branches and authorized centers, the latter operating under Gosbank branches. With the increasing volume of capital investments, the bank’s network of institutions is expanding. Thus, between 1960 and 1975 the number of institutions in the disposition of the Stroibank of the USSR more than doubled—from 746 to 1,500.
P. D. PODSHIVALENKO