The number of people who are unable to cope with their debt burden will keep growing because the poorest people are asking for loans while banks and microlenders are happy to serve them, said financial ombudsman at the Association of Russian Banks Pavel Medvedev during the Relevant Dialogue conference at the Plekhanov Russian University of Economics.
“The Central Bank has made a sensible decision to limit the debt overburden and introduced a debt load indicator to assess the borrower’s resources, which is a fraction where the numerator is the average monthly loan payment and the denominator is the borrower’s average monthly salary. This indicator should be kept secret like failed dissertations were kept secret back in the day,” Pavel Medvedev believes.
He also emphasized that according to the Bureau of Credit History, there are some 11-12 mio bad debtors, that is, individuals who have failed to make monthly payments to banks, microlenders and collectors for three months or more.
“Some 750K people have a debt of over RUR 500K ($7.7K). The others owe a bit less: over 5 mio people have a loan debt of several thousand rubles,” Medvedev says. “If an individual borrows such a small sum and cannot pay off, it means their income is very small.”
According to the financial ombudsman, approximately one third of all debtors’ income equals the subsistence rate, and 10% of them receive less than RUR 6K ($93) a month.