President Vladimir Putin has signed a law limiting the maximum amount of consumer debt; a relevant document is publicly available on the legal information portal.
The new law limits the size of fines and penalties for up to one-year loans. The maximum amount of debt should not exceed the amount issued by more than 50%. This means the interest on one-year loans is limited to 50% per annum. At present, interest rates on such loans from microfinance institutions can reach 300-700%. That is, the president, with a stroke of his pen, cut their interest dramatically. However, the new requirements will only come into force in two years.
From January 2019, the interest rate on consumer loans should not exceed 1.5% per day (now it often reaches 2%), and from July, 1% per day.
The law also prohibits the collection of debts on loans from ‘black lenders,’ that is, from institutions that do not have a Central Bank license. Now only legal entities can operate in this sector: professional lenders and professional collection agencies accredited by the state. Individuals will also be allowed to collect debts, but they must be listed by a written consent of the borrower received by the lender at the conclusion of the original loan agreement.