A new product may appear on the microfinance market – credit lines

A new product may appear on the microfinance market – credit lines. Their size can be up to 50 thousand rubles, the period can be from six months. The rates will be half as high as for payday loans. In the future, microfinance experts believe, credit lines could occupy from 5% to a third of the medium-term loan market. The peculiarity of credit lines is that they increase the formal debt burden of the borrower to a lesser extent and help banks comply with macroprudential limits. But the same properties can also work against borrowers if the line of credit is not used.

A Kommersant survey showed that many microfinance companies are going to start providing credit lines in 2024 or explore such a possibility. In particular, Seimer, Webbankir, and Moneyman are planning to launch the product in one form or another. The limit amounts will be 15–50 thousand rubles, the terms will be from six months. Rates are planned to be half as low as for PDL loans (“payday loans”, now 0.8% per day), at the level of installement (medium-term loans), that is, they will be in the range of 6–272%.

“The advantage of the product is that although it puts significant pressure on the borrower’s maximum debt load (MLL), this happens only once, at the time of opening a credit line. Further, within the limit, the borrower can take out and repay many loans, which no longer affects the debt load,” explained Andrey Ponomarev, CEO of the online financial platform Webbankir. “This way, it becomes easier to comply with macroprudential limits (MPL), which are already at a fairly strict level “

The Seimer company reported that in 2024 they will test a virtual card with a credit limit. “Our card holders will receive a credit limit of up to 50 thousand rubles. with a daily rate twice that of a traditional PDL loan. Debt repayments occur according to schedule, the funds limit is restored as it is repaid. The credit limit will be available to the client for 180 days. If the product is successfully tested, by the end of the year its share may take up to a third of the total volume of Seimer issues,” explained the company’s general director Roman Makarov.

“The interest in the product on the part of clients is primarily among those who were refused by banks,” notes Moneyman product director Anna Pankratova. “These citizens are increasingly interested in microfinance organizations, and a credit line is familiar to them, since the mechanics of use are similar to a credit card.” .

“The advantage of a credit line for a consumer is that you do not need to constantly ask different financial organizations about the opportunity to receive money from one of them, undergo checks and confirm your income. And the rate on the credit line is usually fixed for the period of validity of the agreement,” admits Alla Khrapunova, an expert at the ONF “For Borrowers’ Rights.”

However, not all market participants are optimistic about the experiment with credit lines. “The market is not yet ready globally: the product is too complicated for the client,” believes Nikita Kotochigov, product director at MigCredit MFC. “It will become more relevant when the requirements for the maximum rate become even stricter, to 0.5% per day.” “Active credit limits reduce the borrower’s potential, even if there is no debt on them. Accordingly, users may have difficulties obtaining other products, including from banks, especially taking into account the current strict interim limits for lending to borrowers with a high rate of personal income,” warns a partner of the B1 group of companies Irina Zlobich.

The specialized SRO “MiR” believes that, nevertheless, in conditions of limited organic market growth due to an increase in the number of new clients and an increase in the average loan amount, companies “will inevitably develop adjacent segments and new products.”

Polina Trifonova