The Bank of Russia may prohibit microfinance institutions (MFIs) to give one customer an unlimited number of loans. The regulator wants self-regulatory organizations to determine the limit on the number of loans and renewals of the contract to a single borrower, to the reply of the Central Bank at the request of the Council of Federation on regulation of activities of MFIs published on the website. This will avoid situations when a borrower pays one loan with a new and falls into the “debt trap”, indicates the Central Bank.
Now consumer loans with interest rates from 40% to 44% of the market of MFIs, and “payday loans” (for up to 1 month for the sum to 30 thousand roubles) – 18%, the report said the Central Bank. According to the chief of the main Directorate of market MFIs the Bank of Russia Mikhail Mamuta, the cost of “payday lending” can make 2% per day, since high default risk. “If such loan is repaid on time, after a few days or weeks, the percentages do not reach a significant size,” he adds.
13% of the 4 million clients of microfinance institutions have 2 or more loans, says marketing Director of National Bureau of credit stories Alexey Volkov. For comparison, in the banking sector more than one loan from 17.6 per cent of borrowers, according to United credit Bureau.
Limiting the number of loans that MFIs can issue to one person, does not solve the problem of over-indebtedness, I am sure the General Director of MFO “Moneyman” Boris Batin. “Obviously, the Central Bank intensified amid negative news about unscrupulous lenders, but the measure, which he wants to consider unproductive,” he adds.
According to financial Ombudsman Pavel Medvedev, “limit the number of loans per person — populist and totally meaningless measure.” “80% of borrowers of MFIs are people who are unable to pay Bank debts. Instead provide them with restructuring loans, we pretend to protect them. Debtors can and should help reduce the cost and simplifying the access to courts in the framework of the law on bankruptcy of physical persons”, — said Pavel Medvedev.
The issue of over-indebtedness lies not in the number of microloans and the amount of debt load, said the Chairman of the Board of Directors of the WORLD Alexander Arifov. “We need a more responsible policy of all financial institutions — banks and MFIs — assessment of solvency of borrowers. The issue should be resolved at a more global level, rather than at the level of limiting the number of microloans”, — concluded Arifov.
To ease the debt burden on the citizens will help the amendment to the law “On microfinance and microfinance organizations”, specifies the Central Bank. According to this amendment, from March 29, 2016 accrued interest and other payments on the loan will not exceed fourfold the amount of the loan. The Bank of Russia plans in the future to reduce this ratio to twice the amount of the loan stated in the message controller.