Translation. Region: Russian Federation –
Source: Central Bank of Russia
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The restriction will apply to the most expensive consumer loans, where the total cost exceeds 100% per annum. A three-day cooling-off period will be imposed between the repayment of one expensive loan and the issuance of the next.
Such norms are prescribed in the law, adopted by the State Duma. It provides for serious restrictions on microfinance organizations (MFOs) and radical reform of the industry. These innovations will curb unscrupulous practices that literally lure people into debt bondage.
"About 70% of the most expensive microfinance institution loans are reissued as new ones, more than half with larger amounts. This indicates a serious problem for citizens. People fall into a debt spiral, their debt snowballing. The new law puts an end to such practices. It will allow citizens to pay off their microfinance institution debts, stopping them from accumulating. Importantly, the ban will not apply to loans with interest rates up to 100% per annum. This will preserve financial accessibility: people will still have the opportunity to quickly obtain a loan for urgent needs without accumulating problems," noted Ilya Kochetkov, Director of the Non-Bank Lending Department.
Furthermore, the law has reduced the loan overpayment limit from 130% to 100% of the loan amount. This means that if you receive a loan of 10,000 rubles, you will have to repay no more than 20,000 rubles, including the principal, interest, fees, and penalties.
Microfinance organizations will also be able to issue POS loans for purchases in stores and on marketplaces, with funds being directly transferred to the merchant's account. This will provide additional options for individuals when choosing a lender and support a healthy, customer-focused market.
Preview photo: Irina Mikhailichenko / Shutterstock / Fotodom
Please note: This information is raw content obtained directly from the source. It represents an accurate account of the source's assertions and does not necessarily reflect the position of MIL-OSI or its clients.