The State Duma of the Russian Federation recently approved a new law in its final reading that tightens the rules for issuing microfinance loans to individuals, a move aimed at MFIs operating within the country. The measure was introduced to Parliament last November by a coalition of lawmakers and senators who argued for stricter oversight of short-term lending practices and clearer protections for borrowers.
Under the new framework, the maximum daily interest rate for short-term consumer loans is capped at 0.8 percent, down from the previous limit of 1 percent. In addition, the law sets a cap on the total cost of credit at 292 percent per year, which is a containment mechanism designed to prevent excessive charges and to promote more transparent pricing for consumers. These changes are intended to standardize how microloans are priced and to reduce the risk of unsustainable debt for borrowers who rely on quick-access funds.
Another key provision reduces the permissible aggregate payments that can be due under a consumer loan agreement for terms of up to one year, decreasing the limit from 150 percent to 130 percent of the loan value. This adjustment is aimed at ensuring that repayment obligations stay within reasonable bounds and do not overwhelm borrowers who may already be managing tight budgets.
The legislation also tightens rules around fixed payment amounts. For loans concluded for periods not longer than 15 days and for amounts up to 10 thousand rubles, the maximum fixed payment share is lowered from 30 percent to 15 percent. The changes are meant to give borrowers greater predictability and to reduce the risk of payment shock when short-term credit is used to cover urgent but limited needs.
According to Konstantin Bakharev, a member of the State Duma Financial Market Committee representing the United Russia faction, the current challenge of loan non-repayment by microloan borrowers is influenced by multiple factors. He highlighted that costs of servicing microcredit, the broader economic climate, job market conditions, and the overall income levels of the population all play a role. The law acknowledges these realities and seeks to balance lender risk with borrower safeguards, aiming to create a healthier credit environment overall.
Bakharev also noted that the ongoing partial mobilization situation has implications for borrower credibility in some segments. This context helped justify the introduction of military credit holidays for customers of banks and MFIs, providing temporary relief options during periods of heightened financial strain. The policy is part of a broader approach to consumer protection and financial stability in a challenging macroeconomic context.
Recent statistics reported by RBC, drawing on data from the National Bureau of Credit Histories, show that Russians have deferred seven million microloans in the recent past. The share of microfinance loans within the total lending market rose to a record high of 43.1 percent, reflecting shifting borrowing patterns and the growing role of microfinance in meeting short-term funding needs. These dynamics underline the urgency of creating robust regulatory standards that ensure responsible lending while preserving access to essential credit for households across the country.