The Central Bank will introduce quantitative restrictions on the issuance of consumer loans and microloans

In connection with the increase in the level of debts on consumer loans, the Central Bank is going to introduce quantitative restrictions on the issuance of consumer loans by banks and microfinance organizations from January 1, 2023. The regulator plans to set macroprudential limits (MPL) for loans at the level of 10%, for microloans – 14%. For microfinance organizations, the Central Bank will limit by 35% loans with a credit limit and consumer loans issued to borrowers with a load of more than 80%. Thus, the regulator plans to limit the share of loans with a debt load of more than 80% to 25%, the share of unsecured consumer loans issued for more than five years – by 10%.

“Against the backdrop of a decline in real incomes of the population, the quality of unsecured consumer loans is deteriorating – the growth of restructuring is accompanied by an increase in non-performing debt (90+), as a result, by mid-2022, the share of problem debt (90+ and restructuring) has already exceeded 10% of the portfolio. In such circumstances, it seems appropriate from January 1, 2023 to start applying the MPL to banks with a universal license and MFIs,” follows from the information and analytical report Bank of Russia.

According to the Central Bank, since the beginning of the summer, the portfolio of unsecured consumer loans has grown – +0.2% in June, +0.7% in July and +1.8% in August. However, according to the regulator, if lending standards are lowered, “the vulnerability of the financial system to possible shocks may increase.”

On September 16, the Bank of Russia lowered the key rate by 0.5 percentage points to 7.5% due to lower inflation and revival of domestic demand. This is the sixth consecutive rate cut since February this year.

Read more about delays in consumer loans in the material “Kommersant” “Citizens did not keep their debts”.

Polina Sobakina