MFOs go bankrupt // Participants in the microfinance market ask to adjust their regulation

Microfinance organizations offer the Bank of Russia to weaken their regulation, equating in some cases to banks. This will create a level playing field for all credit institutions, therefore, lenders will be able to offer the client more competitive products, we are confident in the companies. However, experts fear that the relaxation of regulation of the MFO segment may lead to their unjustified enrichment and massive client defaults.

According to the development strategy until 2024 presented by SRO MiR on Friday On October 8, at the МFO Russia Forum, it is proposed to amend the regulation of the microfinance market. In particular, the SRO considers it expedient to eliminate:

• the prohibition on uncontested collection on the notary’s executive note on the loan agreement;
• prohibition on direct interaction with the debtor under the consumer loan agreement when collecting overdue debt;
• prohibition to charge a penalty on any debt, except for the debt on the loan amount.

At the same time, industry participants are asking to add MFOs to the list of organizations that have the right to receive data from the GIS of the Ministry of Internal Affairs, Pension Fund of Russia and the Federal Tax Service using SMEV and to allow MFOs to entrust identification and simplified identification of topics the same financial institutions that are allowed to do so for other participants in the financial market. It is proposed to introduce a number of incentive measures for the development of the industry. In particular, to increase up to 50 thousand rubles. the maximum amount of a consumer loan issued by simplified identification (now up to 15 thousand rubles). And to triple the limits on the use of funds from the MFO cash desk for issuing loans (up to 150 thousand rubles per one person and no more than 3 million rubles per day). According to the SRO, the proposals have already been submitted to the Bank of Russia. The Central Bank announced that it will study the initiative.

Market participants believe that the relaxation of regulation will lead to business growth, lower rates, and customer complaints. )

An increase in the loan amount with a simplified identification would shorten the customer path, and companies would allow companies to increase their issuances by at least 15–20% on the same volume of customer traffic, estimates MigCredit CEO Oleg Grishin. If we remove the existing discrimination against MFOs, then the companies in the sector will have the opportunity to reach bank clients, a more attractive category of borrowers, says the chairman of the board of directors of the Finbridge group, Leonid Kornilov. Olesya Kiseleva, Managing Director of Lime-Loan Company, points out that the inclusion of MFOs in the list of organizations that can receive data from various departments using the SMEV will increase the accuracy of PDT calculations, and the addition of new sources to scoring systems will make it possible to more accurately assess the solvency of borrowers.

According to the Central Bank, the microloan portfolio in the second quarter of 2021 grew to 268 billion rubles. The share of overdue debts for more than 90 days decreased to 27.8%. By the end of 2020, the net profit of MFOs amounted to 18.4 billion rubles. (+ 12%). The return on equity in the market as a whole reached 14%, but mainly due to large companies.

However, experts doubt that the situation will develop so positively. Among the listed indulgences, almost everyone looks negatively affecting the rights and position of end borrowers, says Pavel Ikkert, Managing Partner of Ikkert & Partners Law Firm. So, the elimination of the prohibition for MFOs on indisputable collection on the executive notary’s inscription on the loan agreement in some cases can lead to unreasonable sanctions against borrowers, in this case a contradiction arises, since banks do not resort to such measures, he explains. The cancellation of the prohibition on the accrual of a forfeit on any debt, except for the debt on the loan amount, can also lead to a situation of excessive enrichment of MFOs on its clients, the expert believes.

The existing restrictions and requirements are dictated by the need to ensure consumer protection from himself and maintain a balance of interests in the market, points out the head of the ONF project “For the rights of borrowers” Evgenia Lazareva. Borrowers in this segment of the financial market are less literate, disciplined and conscientious. If we assume that all these proposals are satisfied by the regulator, then in the future we will get a serious increase in the number of personal defaults, she warns.

Polina Trifonova