The Russians will change the priority of payments on delinquent consumer loans. The bill approved by the government and recommended for submission to the state Duma. If now the borrower pays primarily interest on penalty, but now the funds will be used to repay the principal amount and interest thereon. As the authors of the document from the Ministry of justice, this approach will allow the borrower, who was in a difficult financial situation as quickly as possible to pay off the Bank. About the pros and cons of the bill, “MK” talked to the experts.
photo: Alex geldings
In conditions when incomes fall for the fourth consecutive year, the Russians have no choice but to seek financial assistance to banks. Credit institutions lend willingly. However, after some time their once-disciplined customers are hard-core debtors. Companies go bankrupt, and with them the population deprived of jobs and wages, respectively. But the monthly payments on the loans has not been canceled. As a result, our fellow citizens fall into the “credit bondage”.
Read the material: “Not enough luxury”: the Russians scored crazy credits
As the amendments to the law “On consumer credit” to help borrowers get out of debt, “MK” asked the experts:
Kirill Yakovenko, an analyst at ALOR Broker:
“On amendments to article 5 of the Federal law “On consumer credit” was said quite a long time, however, the banking community strongly opposed the changes, for obvious reasons. In fact the current order in which the insertion means borrower under the loan agreement in the first place I go to pay the interest, and the amount of the principal debt covered by the residual principle is the best interests of the lender. In fact, this disturbed the balance of interests in favor of banks, since interest is accrued on the principal amount of the debt, and if it is not reduced, not reduced the size of the regular payments. The bill further would be blocked by the banking lobby, but today there were conditions under which to resist changing the law no longer make sense. First of all we are talking about the appearance of the Institute of bankruptcy of physical entities. Data of the Bureau show that by the end of the first half of 2017 0,66 million Russians have reason for bankruptcy, and another 7 million citizens is delayed for a period exceeding 3 months, which automatically includes them in the risk group. Heavy increase in the number of bankruptcy claims essentially restrained only by the banks themselves, who have to offer customers a troubled debt restructuring and refinancing of previously issued loans, which has a negative influence on margins. In other words, the situation now is: it is much easier to let the borrowers-debtors to gradually repay the principal amount of the debt, than to bring them to bankruptcy. Bankruptcy unsecured collateral loans to banks is unprofitable, because the end, the chances of full satisfaction of creditor”s claims is minimal.”
Alexander Shustov, General Director of IFC “Mani Fanny”:
“The bill is useful, as it stands on the side of the borrower, the least protected person, if to speak about consumer crediting. If the borrower was formed late and assessed a penalty, it is quite logical that with time and interest and penalty will continue to rise, and to stop this growth, should be given the opportunity to redeem the debt. Now set the priority of the payment of a penalty prior to payment of interest and debt and if the borrower is not enough to pay off all at once (and, of course, is not enough, if he was in such a situation), the consumer credit in this case becomes not a loan, but actually leads to a nearly endless stream of annuity payments from the borrower towards the Bank, as the penalty will grow faster, than he will be able to pay it. This should not be. The market should be focused on protecting the interests of the borrower, as the most vulnerable in such a relationship person. I think that as a result can reduce the overall level of arrears on consumer credit, which is now officially in the banking industry is about 15-20%, but in reality, probably closer to 35-40%. The decrease in the level of delay can lead to a decrease in the General level of interest rates in the market, that is, it will benefit current and future borrowers who will not have to pay the loan and even for their less disciplined fellow citizens. Most likely, the bill will also have an impact on the judicial practice and will allow courts to reduce the amount of the penalty, if he, in their opinion, will not match the scale of the offense, the debtors will begin to apply”.
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