Borrowers capped at two high-cost microloans from 1 October
Russian microfinance organisations face new restrictions prohibiting loans with effective rates above 200 percent to borrowers already holding two such debts. The Bank of Russia measure takes effect on 1 October.
Curbing the high-rate debt spiral
Starting 1 October, microfinance organisations cannot issue consumer loans with an effective interest rate exceeding 200 percent per annum to individuals who already hold two outstanding loans at or above that threshold.
The regulatory measure aims to halt compounding debt spirals, preventing borrowers from taking out new high-interest debt merely to service existing liabilities.
To qualify for a new loan with an effective rate above 200 percent, a borrower must now have no more than one such loan outstanding.
Lenders remain permitted to issue credit with an effective rate below the 200 percent threshold, provided the applicant has documented income sufficient to service the debt.
Tighter caps and cooling-off ahead
Central bank data shows that approximately one-third of all microfinance clients carried two or more high-cost loans at the end of the first half of 2026.
The Bank of Russia intends to tighten these constraints further on 1 April 2027.
Under the upcoming framework, MFOs will be restricted to issuing no more than one loan with an effective rate exceeding 100 percent per annum to any individual borrower.
The regulator will also mandate a minimum three-day cooling-off period between the full repayment of one high-rate loan and the disbursement of another.
Ending the microfinance debt trap
Capping 200 percent loans curbs severe over-indebtedness among vulnerable borrowers.
Yet postponing the 100 percent ceiling and cooling-off window until 2027 delays vital consumer protections.
Microfinance lenders face shrinking margins, but dismantling predatory debt cycles is overdue.