The BR Bank, the main regulator of the banking and microfinance sector, plans to introduce new amendments to the law this summer. These changes affect most “payday” loans. According to some financial experts, many companies issuing microloans for a short period of time may simply refuse to sell this service.
Of course, according to representatives of the regulator, all work to tighten the requirements for the payday loan is aimed at improving the conditions for the consumer, as well as protecting his rights. According to many financiers, the upcoming changes in the law should really help Russian borrowers and reduce their debt burden.
Interest Rates requirement from a borrower
Already at the beginning of the summer, the BR Bank plans to impose a limit on the maximum permissible amount of interest that microloan companies may require from a borrower. The amount of interest can not be more than 2.5 times the principal amount of the debt. And then, annually it is planned to reduce the amount of interest each time by half a percent. Thus, in 2020, the maximum interest on a loan will be one and a half times the amount of debt on a loan. In addition, the possibility is considered that the debt, having reached this mark, cannot be increased by any other surcharges or fines.
Consideration and the maximum value of interest rates for payday loans. Perhaps in the near future, the rate on microloans will not be able to be higher than 1.5% per day, and then more than one daily interest.
Many believe that these measures should improve the financial situation of citizens and reduce their financial obligations to creditors.
Also, it is believed that the currently existing rules of microloans allow issuing loans to those who are denied banks. And if you tighten these rules, many people can be without the necessary funding. At the same time, the BR Bank reports that the current situation in the microloan market does not provide full protection to consumers.
Why do “payday loans” disappear?
The measures that are planned to be introduced in the near future will hit the sector the most. The fact of the matter is that it is financially illiterate people, or simply those who do not sufficiently predict their budget, to take the “payday” loans. After the next stage is introduced, each time the sector of short-term loans will become less profitable. And the companies will either start leaving the market or move to another sector of lending.
At the same time, representatives of some organizations say that in addition to the fact that such toughening will lead to the disappearance of legal “payday” loans, the shadow sector will also increase.