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MOSCOW, July 25. /TASS/. Introduction of a 50% upper limit on the interests for microloans and the computation of the full value of a microloan along the banking standards will push most micro lenders out of the market, will make borrowing impossible for some sections of the population and will stimulate the parallel economy, financial market experts told TASS.
Anatoly Aksakov, the chairman of the State Duma committee for financial markets said on Monday he hoped to submit a relevant bill for scrutiny before the end of the week. As of January 1, 2017, the interests on microloans cannot exceed the principal amount of a one-year loan by a factor of more than three but now the State Duma is eyeing a further possible reduction of the limit to 1.5.
In addition, Aksakov said there was a proposal to limit the full value of microloans, the terms of which resemble bank loans, for instance, the mortgage borrowings. On the face of it, the issuers of microloans say they do not have the loans for the purchases of real estate.
Thus the interests on microloans of this kind will become comparable to the interests on regular bank loans. Anatoly Aksakov hopes the amendments will go in effect before November 1, 2017.
The newly proposed limitations will press down the profitability of micro lenders specializing in ‘loans until payday’, that is, the loans of up to 30,000 rubles ($ 506) for periods of up to 30 days, said Andrei Bakhvalov, the main executive director of the OOO Domashniye Dengi (Household Money). These loans account for 24% of the whole market of microloans.
The loans until payday are the most expensive ones. The Central Bank of Russia says the mid-market value of a full loan totaled 599.3% in the first quarter of this year.
"If the products of microfinance companies get into the same basket with bank loans, most companies will be forced to leave the market as their business will stop being profitable," Boris Batin, the director general of MoneyMan online lending portal said.
Microfinance organizations have a riskier clientele and that is why there is no comparing the upper limit of the value of microloans and regular bank loans, Batin said.
"The average monthly revenue per family doesn’t exceed 30,000 ruble to 50,000 rubles ($ 844) with such customers and more often than not they have marred credit histories and that’s why banks practically always refuse to give to lend them the necessary sums of money," he said.
The clientele of the banks and microfinance organizations overlaps by some 25% As a result, the parallel sector of the economy will grow considerably, Batin said adding that the so-called ‘grey lenders’, who issue loans on the terms similar to microfinance organizations but not entered in the Central Bank’s register and not covered by its supervision will more to the foreground.
On the whole, Batin believes that the new initiatives require more discussions, since overly frequent changes on the market of microloans "affect its civilized development.".