The Bank of Russia for the first time after the entry into force of the relevant amendments to the legislation changed the status of existing microfinance institutions (MFIs) with microcredit in the microfinance company, reports TASS.
The first IFC in Russia was the company “Rostov regional business support Agency”.
About 90 working in the market of microfinance organizations plan to become microfinance companies (IFC), says the Bank of Russia.
Microfinance institutions (MFIs) in Russia, called the legal entity in the form of Fund, Autonomous non-commercial organizations, noncommercial partnerships, associations or commercial companies that provide microloans in the amount not exceeding 1 million rubles. Their borrowers are small businesses, individual entrepreneurs and physical persons.
The division of the MFI for the IFC and ICC is stipulated by the amendments to the law “About microfinance performance and microfinance organizations”, which entered into force on 29 March this year.
All MFIs whose information was contained in the state register of microfinance organizations on that date, was recognized by the ICC and are required during the year to 29 March 2017 to bring its name into compliance with the requirements of the law.
Micro-Finance company (IFC) can issue bonds, raise funds of citizens (in the amount of 1.5 million rubles), to issue to a single borrower consumer loans up to 1 million rubles, and remote identification of customers.
Microcredit companies (ICC) are permitted to have a single borrower consumer loans for a total amount of not more than 500 thousand rubles, and it is forbidden to borrow from citizens who are not their founders.
The status of the microfinance companies are unable to MFIs with equity capital of not less than 70 million rubles and submitted to the Bank of Russia is required to obtain the status of IFC documents.
Note, in recent years Russian MFIs often mentioned in a negative context, in particular because of the loans “to pay” or with a daily accrual of interest on balance with rates at times exceeding Bank dozens of times, as well as abuse of the weak financial literacy.
In addition, MFI is known that not trying to sell “bad” debt collectors, as the average discounts of approximately more than 90% of face value, and try to extract maximum profit at the expense of “restructuring loans”.
Earlier it was reported that by 2018, their activities can stop about 3 thousand MFIs, and by the end of this year, the market will leave more than 500 players. All of this is a result of the work of the Central Bank on improvement of the microfinance market. The regulator has promised to leave in the registry only bona fide players, and the others have to leave the market.
Thus, according to the new requirements of the Central Bank, MFIs will have to require from borrowers a proof of funds, just as banks do, which is the percentage of the loan is much lower. This may lead to loss of MFI a huge part of their customers.
It also introduces a ban on the conclusion of more than one loan agreement of the same client with the same MFI within a year.
Analysts therefore predict a rise in the share of the major players through acquisitions or exit the market microfinance small companies.