FX.co ★ Consumer credit harms economy!

According to the specialists’ estimates, the Russian banking sector is developing properly. Recently the national government has been actively observing the situation in the credit sector. The volume of consumer loans is increasing rapidly and in order to keep it in the safe zone, harsh compulsory measures were taken. At the moment the restrictions concern one of the sides; the banks must restrict rates on this type of lending, the fluctuations should not exceed 30 percent, according to the Ministry of Finance of the Russian Federation. All these actions are taken to secure Russia’s economy in terms of increasing number of loans; otherwise there is a threat of considerable risks for loan debtor and banks as well as for the economy. The number of so-called bad credit loans, which are unsecured, is increasing. The crucial number of such loans is 35-40%; meanwhile such figures suggest that the bank is considered to be bankrupted. The level of 12-15% is considered to be acceptable. However, in the Russian banks this level is equaling to 5.2%, even during the crisis it did not surpass the established norm. According to this data, the Russia’s banking sector is in much better condition than it is believed to be. Many financial experts are sure that it should not be restricted and forbidden, but the banks should be provided with additional information about borrowers, then bankers could consider whether the borrower is reliable or not. More detailed personal information may reduce risks and consequently decrease the rates for more trustworthy clients. As a result neither banks and borrowers, nor economy on the whole may appreciate worthily provided measures. It should be taken into account that in Russia consumer lending is one of the main drivers of the economic growth.