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The Central Bank will introduce a “one loan per hand until repayment” rule for microfinance organizations
The Central Bank has completed its discussion of proposals on promising areas for the development of the microfinance market until 2027. Following the consultations, the regulator proposed a plan to introduce the rule of "one loan per person until repayment" for microfinance organizations (MFOs) and a ban on issuing new microloans within three days after debt repayment. The Central Bank is also implementing a plan to reduce the overpayment limit on consumer loans from 130% of the debt amount to 100%.
The regulator explained that the introduction of these measures was necessary due to the growing credit obligations of Russian citizens. "Certain categories of citizens have effectively become dependent on MFI loans. Every month, they take out several loans from various microfinance organizations, increasing their growing debt," the central bank's report says (.pdf).
The central bank also cited research showing that the most common categories of expenses for microloans were food (23-45%), department stores (20-30%) and clothing (5%), while the main expenses for about 20% of borrowers were other loan payments and sports betting.
According to the Central Bank's press service, regulators plan to implement these measures as a matter of priority. Over the next three years, the central bank also plans to review the laws applicable to microfinance organizations.