The Central Bank has tightened restrictions on lending to borrowers with a high debt burden
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The Bank of Russia has introduced stricter restrictions on lending to highly leveraged borrowers by setting macroprudential limits (MPLs) on unsecured loans and borrowings for Q4 2023. Now, with a maximum debt load (LDL) of 50 to 80%, the limit will be 30% of the total amount of loans. With PDN over 80%, the limit will be reduced from 20% to 5%.
IN press release The regulator’s decision is explained by the desire to reduce the growth in the debt load of citizens by limiting lending to borrowers with a high debt burden. Through the introduction of the MPL, the Central Bank can contain the share of risky loans (including credit cards) in total lending. As the portfolio of credit cards is updated under new restrictions, the number of loans to borrowers with high PTI will decrease.
The debt burden ratio is the ratio of all payments on loans to the total income of the borrower. If this proportion exceeds 50%, then the borrower has to pay more than half of his monthly income on loans.
According to the regulator, unsecured consumer lending is “growing at a high pace.” In July, debt growth was the largest in the last year (2%). The annual growth rate as of August 1 was 13.3%.
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