Russia Imposes Restrictions on Multiple Loans Granted by Microfinance Institutions

Russia Imposes Restrictions on Multiple Loans Granted by Microfinance Institutions

In a move aimed at curbing the rapid accumulation of debt and protecting consumers, the Russian government is set to introduce new regulations in the microfinance sector. These changes, proposed by the Bank of Russia in 2024, will come into effect starting from 2026.

From next year, residents of Russia will not be able to obtain more than one loan from microfinance organizations (MFOs) at a time. This limitation is intended to reduce over-indebtedness among borrowers. If a person already has an outstanding MFO loan, new loan applications to MFOs will be refused.

To prevent impulsive borrowing, a three-calendar-day cooling-off period will be introduced before loan issuance. This will give borrowers time to reconsider their decision. The maximum allowable overpayment on microloans will also be reduced from 130% to 100%.

These restrictions form part of a broader effort to reduce reliance on unregulated black lenders, often referred to as shadow lenders. To counter this risk, tighter controls are planned, including a ban on advertising services of black lenders, as proposed by the Central Bank.

MFOs have criticized this initiative, but the authorities have supported it, according to Anatoly Aksakov, the head of the Duma's financial markets committee. He made these announcements to the "Izvestia" newspaper. The Bank of Russia's proposals to limit the issuance of microloans, including the cooling-off period and the reduction of the maximum overpayment rate, were submitted to the State Duma.

The consideration of these proposals will take place during the autumn session, as specified by Anatoly Aksakov. If adopted, these new measures may lead to a mass transition of Russians to "black" creditors. To prevent this, the authorities will tighten regulation in the microfinance sector.

Natalia Petrova, a journalist, reported the news from Moscow. The news was published by RIA "Novy Day" in 2025. It remains to be seen how effectively these changes will be enforced and whether they will succeed in their intended purpose of protecting borrowers without pushing some toward illegal lenders.

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