A draft legislative proposal has been prepared for submission to the State Duma, aiming to prohibited the activities of microfinance organizations (MFIs) within Russia. The publication News reports on this development.
The explanatory note accompanying the draft law states that the initiative, titled the Law on Microfinance Activities and Microfinance Institutions, would be declared invalid in its current form.
The document cites the urgency of the measure as a response to the nation’s present socio-economic conditions, which push the most socially vulnerable groups to increasingly rely on microfinance services.
According to the explanatory note, more than 17 million Russians had taken loans from microfinance companies by the end of 2022, totaling about 608 billion rubles, a rise of 3.1 million borrowers from the end of 2021. It is noted that nearly one in five citizens turn to MFIs because of low income, unstable employment, or the absence of bank branches in their locality. At the same time, new rules governing unsecured loans and credit issuance were set to come into effect in Russia starting January 1, 2023.
The bill’s authors highlight that around 40% of these borrowers have a negative credit history. Sergei Mironov, head of the Fair Russia – For Truth faction, argues that MFIs contribute to a “catastrophic rise in public debt and a sharp decline in living standards,” even after previously enacted restrictions in this domain. The statement features Mironov’s assessment that MFIs have intensified financial strain rather than alleviating it for many households.
Earlier remarks from Mironov suggest that the draft legislation on the liquidation of microfinance institutions is expected to be presented to the State Duma within the current week. He notes that a complete elimination of microfinance services is unlikely to occur. The proposal envisions micro-credit operations continuing under state oversight as a social protection instrument. Specifically, it contemplates launching a state-backed social microcredit program, offering loans with an interest rate not exceeding 5% through banks with government participation to assist low-income groups, pensioners, and families with children.
Past reporting from socialbites.ca indicated where Russians most commonly obtain microcredit in the country. This context informs the debate surrounding potential policy shifts and the broader implications for financial inclusion and social support in Russia.
— Attribution: News agency reports and parliamentary commentary. —