PRESS: Central bank seeks to limit size, rates of microloans

MOSCOW, Feb 14 (PRIME) -- Russia’s central bank plans to tighten regulation of microfinance organizations, gradually reduce the maximum size of payment by borrowers, and reduce interest rates on microloans, business daily Vedomosti reported Wednesday citing Ilya Kochetkov, director of the regulator’s microfinance market department.

At present, the payout ceiling is a threefold loan size, and the regulator proposes to reduce it to 2.5 of the size of the debt, Kochetkov said.

By July 2019, the maximum size of the debt should not exceed a twofold loan size. By mid-2020, the coefficient will amount to 1.5.

The central bank also wants to impose limits on loan rates – no more than 1.5% per day. By 2019, the rate could be reduced to 1% per day.

Kochetkov believes the restrictions will hurt pay-day loans the most.

“That’s why the regulator wants to add a special financial product to the law similar to pay-day loans: people will be able to take out loans of up to 10,000 rubles for no more than 15 days, and there will be no possibility to increase or prolong the debt on such loans. The payment will be fixed – together with interest rates and fines it will not exceed 3,000 rubles (for loans of 10,000 rubles),” the daily said.

(57.7701 rubles – U.S. $1)

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