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Expert warns about Russians’ upcoming bankruptcy

Credit: Alexandr Demyanchuk | RIAN

Millions of borrowers will not be able to repay their loans as soon as this fall when the repayment holiday ends, according to economist Konstantin Selyanin, Ura.ru reports.

This prognosis is based on the fact that for several years, Russians’ income has been decreasing, plus banks are forcing customers to restructure their loans instead of taking a repayment break.

Earlier, pressured by the Central Bank, many lending organizations agreed to the repayment holiday. However, the most critical period will begin in October when debtors will have to pay more having the same income. This is what will lead to more bankruptcies, the expert believes.

“The Central Bank might continue to support Russians after October in order to prevent such a dramatic development,” hopefully comments AMarkets Analytics Director Artem Deev. “Although occasional bankruptcies in the regions will, of course, happen. If it proves necessary, the Central Bank will also tighten regulation for the banks that are refusing to grant a reprieve. Financial organizations enjoy a high level of stability. To avoid low liquidity, they should make effort to accommodate their customers. First of all, banks do not need dozens of unsatisfied debtors who will never come back for another loan once they have straightened out their finances. Second of all, banks value customers with good credit history who, on the other hand, might not be interested in a lender with damaged reputation.”

Russians should carefully read laws and ask for a loan deferment rather than restructuring. Restructuring is also possible, in the future, but only if the debt is high and the borrower will be repaying it for several years like in the case of mortgage payments as the key rate was recently lowered and banks are now offering more relaxed loan terms, the analyst explains.

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