Russia Considers Self-Ban on Lending: Impact and Implications for Consumers
Starting January 1, 2025, Russians will have the option to independently ban themselves from taking out loans. Natalia Ivanova, founder of the international online school of financial literacy and online professions deFIN, explains why this measure is unlikely to become widespread in Russia.
Self-exclusion means a person who worries that someone may apply for loans on their behalf, or who believes they will not need borrowed funds, might choose to block lending as a solution. For other segments of the population, the situation is less clear.
“The self-ban concept mainly targets individuals with stable income and a strong sense of financial responsibility. A large portion of Russians do not fit into these categories. The population is heavily indebted. This debt burden is driven both by a low level of financial literacy and by the reality that many people rely on credit to meet daily needs. They may not fear debt itself but fear being permanently unable to obtain a loan and repay it. The idea of banning lending can seem intimidating,” Ivanova notes.
Under the new changes, a self-ban can be lifted at any time, and a loan application can be submitted again after a two-day waiting period. Yet for many borrowers, this brief delay is still a serious constraint. In most cases, people need money immediately and have few alternatives. The law update will not affect these groups in terms of access to credit, aside from offering some protection against scams.
“Thus, the likelihood of wide adoption of self-exclusion is low. The Central Bank must clearly explain who the initiative targets, how it operates, and why it should be used,” the expert adds.
The financial advisor stresses that rising debt levels hinder the economy, prompting the state to seek ways to reduce this burden. Solutions are typically pursued along two lines: soft measures and hard regulations.
“Soft” approaches include public programs aimed at boosting financial literacy. These programs help people make more deliberate loan choices and consider borrowing only as a last resort when absolutely necessary. For those facing financial shortfalls due to objective reasons such as low wages or a single income in the family, the question becomes how to improve earning capacity to break the faulty mindset: “if there isn’t enough money, take a loan,” the expert explains.
The “hard” path involves restricting lending through banking regulations. This approach has fluctuated over time. In the past, many people easily obtained credit cards. Today, lenders increasingly rely on credit scoring to assess the likelihood of repayment before approving a loan.
From the expert’s perspective, self-exclusion would not become a popular measure. It is more likely to be adopted by individuals who fear fraud or have experienced it earlier. However, those individuals typically do not carry significant debt or overdue payments, so choosing self-exclusion is unlikely to meaningfully reduce overall debt levels.
In summary, the debate on self-exclusion reflects broader questions about financial literacy, debt culture, and the balance between consumer protection and access to credit in Russia.
Russians also wonder about practical steps for achieving affordable housing, such as low-interest mortgage options.