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(Adds detail, Siluanov comments)
MOSCOW, March 28 (Reuters) - Russia's central bank wants banks to use most of their profits to support capital levels, so that they can increase lending, Governor Elvira Nabiullina said on Tuesday.
Nabiullina also said growth had taken hold in a number of sectors and real wages were rising as the country enters a new economic cycle.
"It's very important that in general the banking system has recovered from the shocks of 2014-2015 in time for this moment," she told a meeting of the Association of Russian Banks.
"Banks have every possibility to develop their business and increase lending."
Russia's economy is forecast to grow by up to 2 percent in 2017, after two years of economic contraction.
While banking sector profits are rising, loan growth remains restrained.
Nabiullina said banks' capital levels were comfortable for now but it was a priority for the central bank to complete the removal of weak banks from the market over the next two to three years.
Finance Minister Anton Siluanov told the meeting the government had lost around 100 billion roubles ($1.75 billion) in state funds in Russian banks that have collapsed over the past year.
Siluanov said he supported the central bank's banking sector cleanup and state funds should only be kept in reliable banks.
$1 = 57.0925 roubles Reporting by Alexander Winning and Katya Golubkova, editing by David Evans