Microfinance law under 150 percent. Payday loans will disappear from the market. — That is, MFOs will actually be equated to banks

The State Duma adopted a number of amendments to the federal law on microloans in 2019. The new rules will apply to both MFIs and their clients. In most cases, the changes are aimed at protecting borrowers who, due to a hopeless situation or unknowingly, can take loans at huge interest rates and, as a result, lose their property.

The situation on the microloan market now

• they can only talk with debtors, there should be no threats and physical violence;
• you can contact debtors only during the daytime;
• limited number of calls and notifications per day;
• 3 persons - parents, wives / husbands, colleagues, boss, etc., collectors can only deal with the payer himself and his guarantor;
• you can’t disclose personal information - for example, write an announcement in the entrance that “A debtor lives here”;
• damage to property and invasion of private property is not allowed.

In fact, the collector can only warn the debtor of possible liability, and then try. The same rules will continue in 2019.

Implications for MFIs

Analysts predict that the measures taken will lead to a reduction in the MFI market, as many companies simply will not be able to adjust their business model to the new legal requirements. As a result, the smallest players will disappear or be absorbed by competitors.

For customers, innovations, of course, make life easier. Now they will be firmly convinced that the maximum rate for them will not increase, and the amount of credit obligations will not go beyond reasonable limits. The rights of collectors are already significantly limited, so that debt collection will be more civilized and more often will be carried out in the most logical way - through the court with subsequent arrest of the defaulter's accounts or withholding the amount of the debt from his salary.

Microfinance organizations (MFIs) have limited the accrual of interest on microloans.

Limitation of interest on microloans

On January 1, 2017, Articles 12 and 12.1 of the Federal Law “On Microfinance Activities and Microfinance Organizations” dated 02.07.2010 N 151-FZ came into force, which introduce a ban on collecting from borrowers Microfinance organizations (MFIs) unreasonably high interest on consumer microloans. What is the reason for limiting interest on microloans?The reason is as simple as the world - Microfinance organizations (MFIs), striving to obtain excess profits, issue microloans instantly and practically without checking the client's solvency.
Microloan- This is a small loan that is provided for a short period of time, and as a rule, without confirmation and verification of the solvency of the borrower.

In article 2 of the Federal Law N 151-FZ of 07/02/2010, the concept of "microloan" is described as follows:

3) microloan - a loan provided by the lender to the borrower on the terms stipulated by the loan agreement, in an amount not exceeding the maximum amount of the borrower's obligations to the lender for the principal debt established by this Federal Law;

According to Federal Law No. 151 of July 2, 2010, the amount of a microloan issued to one borrower cannot exceed one million rubles. The actual issuance of microloans in the amount of up to 30 - 50 tr. is issued only with a passport and naturally without checking the solvency of the client.

Federal Law No. 151 of July 2, 2010 No. There are two types of restrictions on the accrual of interest by Microfinance Organizations (MFIs) on issued consumer microloans, namely:

1. Threefold limitation of accrual of interest under a consumer microloan agreement.
2. Termination of accrual of interest on overdue loans as soon as the interest reaches twice the amount of the outstanding part of the debt.

The Bank of Russia provides an explanation of the essence of the restrictions imposed by Federal Law No. 151, which boils down to the following:

1. From January 1, 2017, a three-fold restriction on the calculation of interest under a consumer microloan agreement entered into starting from this date comes into force.

If the repayment period under the agreement does not exceed one year, microfinance organizations (MFIs) are not entitled to charge interest to the borrower - an individual after their amount reaches three times the loan amount.

So, for example, with a loan of 5,000 rubles, the debt of the borrower at no time can exceed 20,000 rubles. This amount includes:

• loan amount of 5000 rubles
• accrued interest in the amount of 15,000 rubles (5,000 rubles x 3).

The Bank of Russia draws the attention of borrowers to the fact that the limitation on the amount of interest does not apply by law to penalties (fines, penalties), as well as payments for services provided to it for a separate fee.

This is how it is stated in the Federal Law of 02.07.2010 N 151-FZ (as amended on 03.07.2016) "On microfinance activities and microfinance organizations" (as amended and supplemented, entered into force on 01.01.2017) :

Article 12
1. A microfinance organization is not entitled to:
9) accrue to the borrower - an individual interest under a consumer loan agreement, the term of repayment of a consumer loan for which does not exceed one year, with the exception of a penalty (fine, penalty fee) and payments for services provided to the borrower for a separate fee, if the amount accrued for the interest agreement will reach three times the amount of the loan. The condition containing this prohibition must be indicated by the microfinance organization on the first page of the consumer loan agreement, the term of repayment of the consumer loan for which does not exceed one year, before the table containing the individual terms of the consumer loan agreement; (As amended by the Federal Law of July 3, 2016 N 230-FZ)

2. The second limitation concerns the delay in the repayment of a short-term (up to one year) consumer microloan: after the delay occurs, the MFI can charge the debtor interest only on the remaining (outstanding) part of the principal amount, however, the accrual will stop as soon as the interest reaches the double amount of this amount.

At the same time, the MFI will be able to start accruing interest again only after the borrower partially repays the loan and (or) pays the interest due.

The penalty (fines, penalties) should be charged only on the part of the principal amount not repaid by the borrower.

So, for example, if the outstanding part under the overdue contract is 5,000 rubles, the amount charged to the borrower will be equal to 15,000 rubles, which includes the amount of overdue debt - 5,000 rubles and accrued interest - 10,000 rubles (5,000 rubles x2).

Each MFI is required to place information about these restrictions on the first page of a short-term consumer loan agreement before a table with individual terms of the agreement.

The Federal Law of 02.07.2010 N 151-FZ "On Microfinance Activities and Microfinance Organizations" (as amended and supplemented) states this restriction as follows:

Article 12.1. Features of the calculation of interest and other payments in case of delay in fulfilling loan obligations (introduced by Federal Law No. 230-FZ of 03.07.2016)
1. After the occurrence of a delay in fulfilling the obligation of a borrower - an individual to repay the loan amount and (or) pay interest due, a microfinance organization under a consumer loan agreement, the term for repayment of a consumer loan for which does not exceed one year, has the right to continue accruing interest to the borrower - an individual only on part of the principal amount not repaid by him. Interest on the portion of the principal outstanding by the borrower continues to accrue until the total amount of interest payable is equal to twice the amount of the outstanding portion of the loan. A microfinance organization is not entitled to accrue interest for a period of time from the moment the total amount of interest payable is reached in an amount equal to twice the amount of the outstanding part of the loan, until the borrower partially repays the loan amount and (or) pays the interest due.

2. After the occurrence of a delay in fulfilling the obligation of a borrower - an individual to repay the loan amount and (or) pay interest due, a microfinance organization under a consumer loan agreement, the term for repayment of a consumer loan for which does not exceed one year, has the right to charge a borrower - an individual a penalty (fines, fines) and other measures of liability only for the part of the principal amount not repaid by the borrower.

3. The conditions specified in parts 1 and 2 of this article must be indicated by the microfinance organization on the first page of the consumer loan agreement, the consumer loan repayment term for which does not exceed one year, before the table containing the individual terms of the consumer loan agreement.

Sources:

• The message of the Bank of Russia dated 01.01.2017 - “The accrual of interest on short-term microloans is limited”
• Federal Law No. 151-FZ of 02.07.2010 “On Microfinance Activities and Microfinance Organizations” (as amended)
• Federal Law No. 230-FZ of July 3, 2016 “On the Protection of the Rights and Legitimate Interests of Individuals in the Process of Reimbursing Overdue Debts and on Amendments to the Federal Law “On Microfinance Activities and Microfinance Organizations””

The activities of MFIs are regulated by the Law FZ 151, which establishes the amount, procedure and conditions for granting loans. A microfinance organization has the status of a legal entity, respectively, must be entered in the state register, and can carry out microfinance activities in the form of a microcredit or microfinance company.

On the basis of this Federal Law on MFIs, the Bank of Russia enters information about a legal entity into the state register of microfinance organizations, refuses to enter information or excludes it from the register. The information is public and public. So, if you are interested in a specific company, you can find information about it on the official website of the Central Bank of Russia.

In general, microfinance organizations have the right to provide loans in the amount of no more than 1 million rubles. with a maximum repayment period of not more than 1 year. Interest is most often calculated at the daily rate, which averages 2 - 2.5% / day. In annual terms, this is 730 - 912.5%.

Interest rates on short-term microloans are always high. However, many clients choose such financial products because of the simplicity and speed of processing a transaction and receiving funds. MFIs, unlike banks, do not require packages of documents, all kinds of certificates of income and from the place of work - most often a passport is enough.

At the same time, it is also important that the borrower can take a small amount, ranging from 1,000 to 3,000 rubles, depending on the conditions in a particular company. Banks do not provide such small loans. The maximum term for microcredit is 1 year, but most organizations are usually limited to 1 month (30 days).

It makes sense to apply for a microloan when you really need money very urgently for a short period of time - and you are sure that you will be able to repay it on the due date. Otherwise, high interest, penalties and late fees can lead to endless debts, where you pay renewal fees or you are charged penalties, and the principal amount does not decrease.

Regulation of MFI activities

Consider the main conditions for providing microloans in accordance with the Federal Law on MFIs:

1. Companies provide loans in Russian currency on the basis of a microloan agreement.
2. A microfinance organization specifies the terms of the loan in the rules for granting a microloan, which are approved by the company's management body.
3. The rules for granting a loan are in the public domain for review. It should contain the following information: the procedure for submitting and considering an application, the procedure for concluding an agreement and providing a payment schedule, additional conditions that are established by the organization and are not the terms of a loan agreement.
4. The agreement may provide for the issuance of a targeted microloan, which implies control over the use of funds and imposing on the borrower the obligation to ensure such control.
5. The rules cannot establish the rights and obligations of the parties under the microloan agreement. If there are conditions in the provision rules that contradict the agreement, the conditions of the agreement concluded with the borrower are applied.

Always carefully study the documentation posted in the public domain, carefully read the general and individual conditions, and if something is not clear to you, ask questions to the manager / consultant of the company.

In addition, according to some amendments to another law on MFIs, for the illegal use of the phrase microfinance organization, a fine for legal entities can be 100,000–300,000 rubles, and for failure to provide rules for review – 50,000–100,000 rubles.

Responsibilities of a microfinance company

According to Federal Law 151 on MFIs, a company has the following obligations to a potential borrower:

• place the rules for granting microloans in a place accessible for viewing, as well as on the Internet;
• disclose information about persons influencing the decision-making by the management bodies of the microfinance company;
• inform the potential client about whether the organization is included in the state register, and, upon his request, present a copy of the relevant document (usually this is an IFI certificate);
• give complete and reliable information about the conditions for granting a loan to the person who submitted the application, including the rights and obligations associated with obtaining a microloan;
• when submitting an application before signing the agreement and receiving a loan, inform about the conditions, possible changes at the initiative of the parties, payments related to obtaining, servicing, repaying a loan and breaching obligations;
• guarantee secrecy about the operations that MFI borrowers carry out;
• comply with economic standards in accordance with the law on MFIs 2017 and the regulations of the Bank of Russia;
• perform other duties in accordance with the legislation, legal norms and acts of the Central Bank of the Russian Federation, constituent documents and the terms of concluded agreements.

Before signing an agreement at the application stage, we recommend that you study the rules, additional loan agreements, payment schedule - and ask questions if there are nuances that you do not understand. Remember, employees of a microfinance organization are required to provide complete and reliable information before concluding a transaction.

Features of the calculation of interest in case of delay

In 2016, the law was revised, how many MFIs can charge maximum interest on the amount of an outstanding microloan. The interest limit has changed from four times the principal amount to three times.

So, from January 1, 2017, the law on MFIs came into force, according to which microfinance organizations have the right to accrue interest up to three times the amount of the principal debt. In this case, the company can charge a commission only on the outstanding part of the loan.

So, how is the calculation of debt in case of delay in payment:

1. Accrued interest should not exceed twice the amount of outstanding debt. From the moment the debt on interest is doubled from the principal amount of the debt, the organization has no right to continue accruing interest. But from the moment of partial repayment of the principal debt or payment of interest, the accrual of commission can be resumed.
2. In the event of a delay in payment, the organization also has the right to apply penalties with the accrual of additional fees for the borrower's failure to fulfill its obligations.

To understand the calculations, let's take a debt (a microloan or part of a microloan) of 10,000 rubles. - this is the amount of the principal debt, interest on it cannot be more than 20,000 rubles. (twice the amount of debt on interest). As a result, the total debt is 30,000 rubles. (three times the amount of the principal debt).

The information specified in paragraphs 1 and 2 must be indicated on the first page of the loan agreement with a repayment period of not more than 1 year - before the table indicating the individual conditions for granting a microloan.

Due to the above circumstances, many microfinance companies sell or write off debts overdue by more than 90 days to collectors and agencies. This happens because it is unprofitable to continue accruing interest, since organizations pay taxes based on accrued interest, and not on actual profits - due to debts with such a delay period, profits are significantly reduced.

The best offers of microloans

Today, Kommersant, citing several high-ranking officials in the Government of the Russian Federation, announced that the possibility of limiting the maximum interest rate on microloans is being worked out at the level of the State Duma and the Central Bank of the Russian Federation. Anatoly Asakov, head of the State Duma committee on the financial market, confirmed that such work is underway: "We intend to set a ceiling on the rate on MFI loans at 150%."

Why did you decide to set maximum interest rates for MFIs?

Since 2014, the Central Bank of the Russian Federation has been monitoring the activities of microfinance organizations without interfering in the pricing of this market segment. But now it is time to set the human rules of the game. Even Head of State Vladimir Putin, at a meeting of the Presidium of the State Council on April 18, 2017, dedicated to protecting consumer rights, compared microfinance organizations with an old money-lender from the well-known novel by Fyodor Dostoevsky “Crime and Punishment”: “The famous grandmother from Dostoevsky is a very modest person in comparison with our current usurers.”

And it is true. Microfinance organizations offer loans at monstrous interest rates. Payday loans are very popular. Currently, the average interest on microloans is 599.311%, and the maximum percentage is fixed at 799.081% per annum. At the same time, the total cost of a loan for consumer loans received from banking institutions is only 28.250%.

What will happen to MFIs after the introduction of the maximum interest on microloans?

Given that average microloan rates could drop by a factor of four, many microfinance institutions may exit the market. Also, the MFO market may be reorganized to new realities: to issue loans for larger amounts and for a longer period.

When can we expect legislative changes?

It is expected that amendments to the laws “On consumer credit (loan)” and “On microfinance activities and microfinance organizations” will be considered by the State Duma this spring session, and by the end of 2017 they may already enter into force.

Today, the deputies offer a rather radical solution to the problem of unscrupulous creditors. We are talking about amendments to the laws “On Consumer Credit” and “On Microfinance Activities and Microfinance Organizations”, which set the maximum interest rate on microloans at 150% per annum. The deputies believe that the adoption of the amendments will improve the situation with the rights of borrowers and improve the microfinance market. Representatives of MFIs object that this measure will bankrupt a significant part of organizations and completely destroy the payday loans segment. Novaya Gazeta discussed the legislative initiative with both sides of microfinance regulation.

Petr Sarukhanov / "New"

Anatoly Aksakov

Chairman of the State Duma Committee on the financial market:

— Why is it necessary to introduce additional norms for MFIs? Do you think that the Bank of Russia does not regulate the market strictly enough?

— Our proposal appeared on the basis of numerous complaints and appeals from citizens during the current period. The measures already taken by the Bank of the Russian Federation are giving a positive result, and this shows that the trend is correct. But we believe that an adjustment towards a tougher line on the formation of interest rates on microloans is necessary. There is a European directive that defines the rules for granting loans to microfinance organizations. We decided to take it as a basis. The directive provides that for large loans (over 200 euros in Europe), MFIs will determine the full cost of the loan using the same formula as banks. This will significantly reduce the interest on such loans. Now MFIs can set an interest rate no more than a third higher than the average market for microloans. But given that the average rate in this market is very high ( 600% per annum. — ​ OH.), marginal rates reach up to 800%.

— In other words, MFOs will actually be equated to banks?

— For large loans, yes. Moreover, regulatory arbitrage, that is, less stringent regulation, remains with MFIs. They will still be in a more benign environment regarding supervision. Nothing will change in this regard.

— What about payday loans? Does this type of loans have a right to exist?

— Yes, this is a global practice. We just have a small payday loan, unfortunately, often turns into a huge debt, which can lead to the loss of housing by the borrower. Huge interest, penalties, fines run up. People fall into debt bondage, and a loan becomes a way to take an apartment. Therefore, for small short-term loans, we propose to establish a limit on the amount of debt that can run into one loan. The rule is already in force, according to which the maximum amount of debt cannot exceed the body of the loan by more than 3 times, but we propose to tighten the norm to 1.5 times. This will reduce the debt burden of citizens, and the MFIs themselves will not issue loans right and left, shifting bad debts and defaults onto conscientious payers and receiving high income due to this. But our ideas have not yet been documented, they are discussed at the concept level ( in the Bank of Russia, Novaya Gazeta was informed that they had received proposals from deputies and were studying them. — ​ OH.).

— There is an opinion that MFIs have not yet had time to adapt to the previous regulations, and such a drastic step will only lead to the flourishing of the black market.

“The black market already exists, they are fighting it. There are different options for mobilizing law enforcement agencies to fight the black market, which we have in mind. And the Central Bank should also be involved in this process. But in the Duma there are more extreme ideas than ours. At committee meetings, we constantly receive proposals from the regions to ban MFIs altogether. The deputies receive a wave of complaints, and local authorities see a way out in this way. But we believe that nothing should be banned. We simply take European practice and extend it to Russia.

— Can new financing mechanisms for MFIs be proposed so that they remain profitable and can attract investment in tougher conditions?

— I admit that it is possible. We are ready to consider various options for facilitating the access of MFIs to funding, for example, through the placement of securities. But here we will wait for initiatives from the market itself. Unfortunately, now we are seeing that most MFIs operate on the principle of a financial pyramid. On the one hand, they terrorize the population by issuing expensive loans, and on the other hand, they attract resources and "throw" their own creditors. For example, we propose withdrawing credit cooperatives from additional regulation, because the interest rate situation there is more favorable, and they work with their own resources. And for MFIs, it is very important that those who want to grab and dump leave the market. Given the preservation of regulatory arbitrage, there is still a niche for MFIs, this business will continue to be interesting. But already for healthy institutions that do not abuse the degree of freedom that they have.

Mikhail Doronkin

— It is not correct to equalize the marginal cost of microloans (even for relatively large amounts) and bank loans for several reasons. First, banks have a more diversified funding structure, which allows them, among other things, to raise funds at lower rates. For most MFIs, the sources of business financing are limited: there is no access to the funds of mass investors, bond issues are unprofitable due to the small scale of the business. At the same time, for lenders, microloans are a high-risk business, which is reflected in the higher cost of loans and loans attracted by MFIs. Secondly, the operating costs associated with the issuance of microloans are traditionally higher than those of banks, especially in the payday loans segment. Finally, MFIs are focused on financing less reliable borrowers, which results in a higher cost of risk.

Strictly limiting the maximum level of interest rates on microloans means a separation from the real situation in the microfinance market, since the real cost of microloans, formed by its participants, taking into account the current cost of funding and the risk profile of borrowers, is actually ignored. Undoubtedly, such an innovation, if introduced, could once again expand the scope of activities of the so-called “gray” creditors (not included in the register of MFOs), which the Bank of Russia has been actively fighting over the past few years.

Press service of MigCredit LLC:

— The bill under discussion to limit rates will hit primarily payday loans, that is, loans up to 30,000 rubles for a period of 3 to 30 days. For loans issued for long periods (for example, for a year), the rates are already much lower (about 200%). At the same time, the reason for such high rates on payday loans is purely economic - at lower rates, a small loan for a short period simply will not pay off. If we compare the amount of overpayment on a payday loan and a bank loan, then in the case of a bank loan, the amount of overpayment for the client will be even greater. But the cost of borrowing will be higher in the case of MFIs due to much higher risks (3-4 times) and expensive funding. Therefore, we can conclude that the bill actually prohibits payday loans. If it is adopted, then most of the actively developing companies will leave the microfinance market, since their expenses will not pay off. With a reduction in rates from 600 to 150% for a loan of 7,000 rubles for a period of 15 days, an MFI can lose up to 80% of its profits. And this means that potential customers will not receive the money they need, and if they do, it will be from black creditors and at much higher rates.

Andrey Bakhvalov

Chief Executive Officer of Home Money LLC:

— You need to understand that clients of banks and MFIs are not the same audience. MFIs work with less solvent population; the average monthly income of these people does not exceed 30-50 thousand rubles per family. Often, their credit history is already damaged, so banks in 100% of cases refuse these people to receive the required amount. We must not forget that during the crisis, banks have drastically reduced the number of regional offices, thereby leaving a significant part of the Russian population without the opportunity to get a loan. MFIs, on the contrary, are actively present in small towns and even in villages.

With the rate limited to 150% per annum, only consumer loans to individuals and POS products will remain on the market ( loans issued directly at the point of sale for the purchase of goods. — ​ OH.) - short payday loans (PDL) will cease to exist in principle. According to our data, this segment accounts for 24% of the total market and 37% of total loans. The number of companies that will be forced to stop their activities may exceed a thousand, which will negatively affect the entire financial sector. And part of the country's population will be left without the opportunity to legally obtain borrowed funds for urgent needs (according to the questionnaires of MFIs, the reason for obtaining a loan "to payday" in 60% of cases is "urgent needs", and in 40% - "delayed salary").