Microfinance organisations to use EIR calculated using new limit values

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The Bank of Russia has published the average market effective interest rates (EIRs) on consumer microloans of microfinance organisations (MFOs).

EIRs calculated in percent per annum for all categories of consumer loans based on MFO financial reports for 2018 Q4 are to be applied in 2019 Q2. Pursuant to the law, the EIR marginal value cannot exceed the average market value by more than one third.

At the same time, in accordance with the new amendments that have come into force, starting from 28 January 2019, the daily interest rate on short-term consumer loans has been restricted to 1.5% per day, while from 1 July 2019 it will be reduced to 1% per day, limiting the EIR value to 365% per annum.

In view of the above, in the second quarter of 2019, microfinance market players will use the daily rate restriction instead of the specified average market EIRs.

The Bank of Russia believes that the new amendments will significantly lower the cost of short-term consumer loans (of a maximum of 30 thousand rubles for up to 30 days).

14 February 2019

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