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MOSCOW, March 13. /TASS/. The ruble’s slump and growing crisis-like phenomena in the Russian economy cause people’s liabilities to banks and the state to soar to new highs. Some have outstanding debts on bank loans and housing and utility bills, and others, piles of unpaid traffic police fines. The situation is the worst for those who had taken foreign currency denominated mortgage loans, because the exchange rate of the national currency, the rouble over the past year has slumped 50%, while people’s rouble incomes remained unchanged at best. In a situation like this the government should unequivocally be on the individual’s side, because otherwise an outbreak of social discontent is imminent, analysts warn.
According to the United Credit Bureau (UCB), Russia’s overdue debts on loans reached 775 billion rubles (about $12.7 billion). Households’ utility bills last year exceeded 130 billion rubles ($2 billion). People in the Central Federal District alone owed the housing management and utilities companies nearly 50 billion rubles ($797 million). The debt had gone up 30% in just one year. The amount of people’s debts for telecommunication services on January 21, 2015 totaled 27.2 billion rubles ($433 million), rising 18% over twelve months.
Having the stick-and-carrot method at their disposal to address the debt issue the authorities mostly prefer the ‘stick’ part of it. Under one of the most radical proposals for struggle with non-payers a ban may be imposed on access to public services, transactions with real estate, and on an opportunity to submit documents or get any from the bodies of state power.
Delays in paying housing and utility bills for three months or more may be punishable with a fine comparable to the value of a bank loan. The banking community has submitted to the State Duma a proposal for taking driving licenses away from all debtors who owe 10,000 rubles ($159) or more until the debt is settled.
Debts on mortgage loans, in particular, foreign currency-denominated ones, are the most sensitive issue. The ruble’s devaluation has caused Russian’s monthly payments to grow three-fold, and the aggregate payments due in some cases exceed the household’s total income. Even if the borrower decides to sell one’s property, the money raised will be not enough to settle liabilities to the bank. As a result, borrowers run the risk of losing the roof overhead, while the debts will be still there. Last December the foreign currency borrowers turned out for a rally in central Moscow to demand their debts should be rescheduled under what they described a "fair exchange rate." The demonstration gathered a crowd of about 2,000.
The authorities are aware of how acute the situation is. At the beginning of February government members and State Duma deputies contemplated the possibility of disbursing 4.5 billion rubles ($71 million) through the Agency for Housing Mortgage Lending to support both individuals and banks. Russian Prime Minister Dmitry Medvedev has issued instructions to establish a mechanism of assistance to mortgage borrowers who have encountered really serious problems.
Besides, the banks will be allowed to reschedule currency and rouble-denominated mortgage loans. A bill to this effect is to be submitted to the State Duma in the near future.
A bill authored by upper house members, imposing a freeze on enforcing the recovery of mortgage loan debts and confiscating the debtors’ real estate, has already been presented to the State Duma for consideration.
"The state must perform its main function - that of protecting the individual, and not to generate no end of regulatory acts an ordinary citizen is unable to understand and digest," senior lecturer at the labor and social policies chair of the presidential academy RANEPA, Lyubov Khrapylina, told TASS. "Real dodgers are not very many. In most cases the defaulters are law-abiding citizens who have by virtue of different circumstances, economic ones first and foremost, have gone unable to honor their liabilities and are locked inside the vicious circle."
The state is obliged to extend a helping hand to the individual, and to selected banks, and to settle the problems of refinancing and rescheduling payments, Khrapylina said.
"Borrowers are obliged to give back sums that are proportionate to those they had borrowed. The client who borrowed one million should not be expected to give back five million."
As for fines for overdue debts on housing and utility bills, traffic police fines and others, Khrapylina called for taking into account how many unlawful decisions were taken and financial violations committed by the organizations involved.
"The individual is always held responsible. That’s not exactly one may call partnership. The state provides very insignificant protection, and it remains unclear why the individual has to protect one’s innocence all the way. Patience is wearing thin and an outbreak of social anger may follow."
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