State Duma, Lower House of Russia’s Parliament, intends to criminally prosecute those companies which extend loans to private individuals illegally, i.e. without a license from the Central Bank, Izvestia daily reports.
According to Anatoly Aksakov, Chairman of the State Duma Committee on Financial Markets, there is no certainty yet on the possible sentence for executives of such institutions. Experts believe, a maximum term in prison may be five years, while in reality the actual punishments will not be that tough.
“Jail time is to be discussed with security agencies, judicial community, Central Bank and Finance Ministry”, Anatoly Aksakov believes.
At the moment, black market lending is punishable by a fine only, which is not always efficient, since such companies operate massive volumes of cash and hence even large fines can not cause any serious damage. Currently, fines like that are within RUR 500K ($7,500).
It is noteworthy, black market lenders do not engage in any fraud as such. They extend loans to individuals on generally quite transparent terms. Yet interest rates on such loans are exorbitant and result in rapidly growing overdue repayments.