Micro-installment without fines and penalties – Newspaper Kommersant No. 55 (7500) dated 03/31/2023

For the first time, the Bank of Russia limited a microfinance company in the possibility of charging fines and penalties. This may be due to complaints from borrowers and repeated violations of the rules by Revo Technologies, to which the measure was applied. This IFC combines two products – a microloan and BNPL, and they require different approaches.

The Bank of Russia issued an order to the IFC Revo Technologies to limit the accrual of a penalty (fine, penalty fee) under consumer loan agreements. As the regulator notes, the restriction “applies to newly and previously concluded consumer loan agreements.” At the same time, it does not apply “to other areas of the IFC’s activities and does not prevent the payment of funds under previously concluded agreements.”

As Alla Khrapunova, an expert of the Alla Khrapunova project of the ONF “For the Rights of Borrowers”, notes, such a restriction – on the accrual of fines and penalties – is introduced for the first time. Usually they limit the conduct of any operations – the issuance or attraction of funds, she notes.

Since the end of 2020, the Central Bank has issued restrictions on certain types of activities for about two dozen MCCs. Such restrictions are usually introduced for a period of three months to one year. Moreover, if the violation is eliminated the next day after receiving the order, the restriction will still be valid for the period specified in it, lawyers say. At the same time, if the company violates the order, it is likely to be excluded from the register.

MFC Revo Technologies operates under the Mokka brand. At the end of 2022, the loan portfolio amounted to 10.3 billion rubles, revenue – 4.6 billion rubles, net profit – 833 million rubles.

According to Expert RA, the company operates in the BNPL (Buy Now Pay Later) segment. The difference with the classic BNPL is that customers receive an advance that can be spent on paying for goods in equal installments at retail outlets, but interest is charged on this advance, like a microloan. According to open data, the rate reaches 0.8% per day. The amount of the advance can reach 100 thousand rubles, the term is 180 days. The company also offers additional services – withdrawing an advance from a card, sending an advance as a gift, etc. BNPL does not provide for such operations.

According to Kommersant’s interlocutors in the microfinance market, it was the company’s combination of essentially different products: loans and installments that could have caused the violations. There is no limit on fines and penalties for BNPL, but the initial payment is made by the client of BNPL services from his own funds, Kommersant’s interlocutors note. Require products and a different set of customer information. BNPL is issued simply by phone number, a passport is required to apply for a microloan.

“This type of restriction could be introduced only in case of serious violations in the calculation of such penalties. Perhaps the procedure for calculating fines and penalties was unfair,” Alla Khrapunova believes. Usually, the Central Bank first holds meetings, writes letters, says that something is being done wrong. “Restrictions are always introduced if the company does not respond to warnings and constantly commits the same violations,” the expert says.

This often happens after numerous complaints about violations by the organization, Valery Zinchenko, senior partner at Pen & Paper, also points out. “At the same time, against the backdrop of not the most stable phenomena in the Russian economy, the debt burden of the population continues to grow, which the Bank of Russia also draws attention to,” he believes.

The Bank of Russia did not respond to Kommersant’s request about the reasons for imposing such restrictions on the company. SRO MiR, of which Revo Technologies is a member, emphasized that they do not comment on the activities of their members and the supervisory actions of the Central Bank. Revo Technologies noted that they are actively working “with the regulator to eliminate the identified technical shortcomings of some IT systems.” At the same time, the company is confident that “the measures being taken will allow to fully remove the imposed restrictions in the near future.”

Polina Trifonova