WHERE do scam- and inflation-weary Russians keep their money? Almost anywhere but a bank.
Whenever possible, Russians convert their rubles to dollars and hide them in their apartments. One popular place is inside a book, slipped onto a crowded shelf. One fellow hides his savings in his piano. Another woman uses a handbag stashed among tools in a utility closet. Some keep their cash in an envelope casually shuffled among papers and mail.
The Yeltsin administration wants to pull the estimated $20 billion that Russians have tucked away in such places into the working economy, where it can - not incidentally - help fund the federal budget.
That's why the Russian government issued its first savings bonds last week aimed at household investors. Another recent presidential decree has called for establishing a fully regulated mutual-fund market by the end of the year.
Russian savers have become a warier lot; they have lost too much. Russians have been practicing capitalism without a safety net. People who are just being exposed to the financial marketplace for the first time are thrust into a position that requires a lot of maneuvering for them to hold onto their money.
''What is obvious to a Westerner is very confusing for a Russian,'' says Svetlana Kulnitskaya, spokeswoman for the Moscow Consumers' Union. The Russian financial scene is more complex and more dangerous than that of the United States or Western Europe.
Ms. Kulnitskaya sees a steady stream of people who have lost their money. ''It's very clear, Russians will trust everyone, and almost immediately,'' she says.
Banks not always safe
Like many Russians at or near retirement age, Vladimir put the money from 40 years of work and saving in a bank account for safety. He chose the favorite bank of the Moscow intelligentsia and cultural elite, popular among members of the Bolshoi ballet, film directors, and literary figures.
None of that mattered when a Moscow court froze the accounts of Chara Bank, which turned out to be missing key documents for figuring its balance sheet. Vladimir, who withholds his surname in case his comments somehow hurt his chances of repayment, does not know now if he will ever see his life savings again.
Now he is part of a crowd outside a press conference of the Chara Bank chairman, a crowd hungry for information about the bank. Rumors are spinning about government intrigue, Chechen crime syndicates, criminals who have absconded with their money to the US, and better-connected depositors who already have their money back through secret deals.
Such scenes are not unusual here.
By now, Russians who still have some savings left hardly know where to put them for safety, much less for growth.
Those who put their rubles under their mattresses or in a bookshelf saw them turn to dust in the hyperinflation of the early 1990s. Savings that might have bought a used car in 1991 would barely buy lunch for one by 1995.
Inflation is no longer hyper, but still in the range of 100 percent per year.
But since last spring, Russians can no longer find safety merely by converting their rubles into dollars. The dollar has lost value to the ruble.
''It's hard to find anywhere now that savings are likely to grow except your own business,'' says Maya Khutoretskaya, who is putting her money into a new food-making business. ''And you can never be sure of that.''
Mrs. Khutoretskaya's father lost nearly all his savings to the infamous MMM investment scheme that collapsed in 1994 and the lesser-known Construction Finance Company. Both went bust, and thousands of Russians lost their savings.
Sergei Mavrodi, the financier who ran the MMM enterprise, is forming a political party of the legions of people who lost money in his business. The attraction: Those who sign up will be first in line to be repaid, he says.
Another entrepreneur with political ambitions, Konstantin Borovoi, is buying up failed businesses and investment companies to revive them and repay their original investment. It will require of them, however, a little further investment.
Consumers who have been cheated have been quick to form groups and seek their money. But one pattern, says Kulnitskaya, is that the organizers of the groups often get their own money back and quit the group.
Mutual-fund market by year end
In this treacherous environment, Dmitri Vasiliev is leading the design of a regulated mutual-fund market as director of the Federal Securities and Exchange Commission. He is just completing the main regulatory framework set up, following Western principles.
The Russian investment companies that do not meet the standards Mr. Vasiliev and his colleagues set up must either stay out of the market or, he says, pounding his desk for emphasis, ''We will simply liquidate them.''
By the end of the year, the mutual-fund market should be functioning, open to both foreign and domestic investors. Most investors, Vasiliev expects, will be Russians. It will be next summer before real growth is evident, he says, but ''1996 will be the year of mutual funds.''
He estimates that as much as 10 percent of Russian savings could be absorbed by the mutual funds.
The Russian government hopes to draw some of those savings much sooner with the 1 trillion ruble issue of savings bonds last week, an issue worth about $225 million.
The Yeltsin government has earned some credibility in the bond business. While the Soviets reneged time and again on public bonds, the Yeltsin government has redeemed all its bonds on time and in full, even while state pensions to retirees and wages to Siberian miners, among other bills, sometimes go unpaid.
''That just means that banks are more important than pensioners'' to the Yeltsin administration, says Dmitri Olshansky, director of the Strategic Analysis and Prognosis Center.
The test will be to see whether small Russian investors are repaid with the same diligence as the larger institutional investors that have been chief bondholders so far.
Estimates of how much money Russians have saved are very slippery. The common estimate of $20 billion in cash is only the midpoint of estimates between $15 billion and $25 billion. Much of that amount is not hidden in apartments, but is in fact invested in the huge portion of the Russian economy that is off the official books.
Mr. Olshansky estimates that maybe a quarter of the population earns a little more than they spend each month.
But as little as 3 to 5 percent hold what he calls strategic savings, meaning money that they can invest and forget about for a time.
One 1994 study in a Siberian city found that about 10 percent of households had more cash on hand than they needed to get through the month.
Reducing investor skepticism
''The population in general will trust neither the state nor private institutions with their money,'' says Vyacheslav Bobkov, director of the Russian Center for Living Standards.
But Vasiliev notes that if his commission is successful in licensing good investment firms and opening new ones, popular trust will grow.
''The Russian mentality is changeable,'' he says. ''People are inclined to change their point-of-view quickly now.''