Loan approvals in Russia could fall further after October 1 changes
A drop in loan approvals is expected in Russia as the new Bank of Russia requirements take effect on October 1. Analysts warn that this shift could depress both the loan market and the finances of everyday people. The concern was raised by economist Andrei Barkhota in his article You Can’t Refuse to Lend, published in Moskovsky Komsomolets. The piece highlights how the changes may slow access to consumer credit even for households that previously qualified for small loans.
According to Barkhota, two thirds of Russians live in regions carrying a heavy debt burden. A substantial share of newly issued consumer loans has been directed toward debt repayment and covering shortfalls in household budgets. The economist notes that new bans and restrictions could worsen the situation for the most vulnerable groups. The core issue, he argues, is not only the higher cost of new borrowings but a broader decline in the willingness of banks to approve loans. In his view, this signals an objective reduction in consumer credit availability for the general population.
Barhota warns that the consequences of these restrictions could be dramatic and carry social consequences. He does not rule out the possibility that as many as seven out of ten applicants rejected by banks might seek financing through credit brokers or microfinance institutions, often on unfavorable terms. He also contends that macroprudential innovations introduced by the Bank of Russia could revive nonbank lending practices such as usury and pawn loans, as lenders seek to fill gaps left by tighter regulation.
In a difficult economic environment, the expert predicts an uptick in requests for personal bankruptcy declarations. He emphasizes that the strain on many households stems from relatively low income rather than wasteful spending or irresponsibility. A shift in perspective is needed to address the core problem. Barkhota questions whether citizens burdened by high debt should be viewed purely as risks to financial stability or as individuals facing real living hardships. He suggests that restricting new loan issuance may amount to a market‑level form of financial euthanasia for indebted borrowers.
It is important to recall that the central bank tightened lending rules for borrowers with high debt burdens starting on October 1. The policy change makes obtaining new loans more difficult for indebted individuals, even for relatively small amounts. Analysts argue that the new framework could reshape consumer finance across regions, influencing both spending behavior and debt management strategies. The conversation now focuses on balancing prudent risk controls with securing access to credit for households that rely on borrowing to cover essential needs. The broader question remains: how can policy makers, lenders, and borrowers adapt to maintain financial stability without pushing vulnerable groups into harsher financial circumstances?
For context, financial authorities point to the goal of reducing overindebtedness and improving debt sustainability. Yet critics warn that a sharp contraction in lending could slow economic activity, constrain consumer demand, and push more people toward informal or unregulated lenders. The evolving landscape invites a careful recalibration of credit norms, consumer protections, and support mechanisms that help households manage debt more effectively while preserving their ability to participate in the broader economy.