In 2020, investors take interest in bonds of microfinance organisations

Over the past two years, the amount of bonds of MFCs and pawnshops in household depository accounts increased more than four-fold to 3.6 billion rubles at face value. At the same time, Federal Law No. 306-FZ on the protection of retail investors adopted in July 2020, stipulates that in order for bonds to be sold to non-qualified investors either such bonds or their issuer must have a rating at the level not lower than set by the Bank of Russia. Only bonds sold before the effective date of the law are exempted from that requirement. In the future, non-qualified investors will be able to purchase such instruments only after passing a test.

In general, despite the restrictions related to the spread of the coronavirus pandemic and a temporary decline in activity in the first half of the year, the microfinance market grew in 2020. The portfolio of microloans rose 18% to 249 billion rubles while the amount of loans issued remained at the 2019 level.

The portfolio structure continued to shift towards medium-term loans with the share of payday loans declining. The proportion of loans to small- and medium-sized enterprises reached nearly a quarter of the portfolio amid preferential programmes and the increased amount of government financing of microfinance organisations (MFOs) that provide services to entrepreneurs.

The growth of overdue loans was temporary, being observed only during the most acute phase of the crisis. In 2020 H2, this growth was persistently declining as economic activity recovered and borrowers’ payment discipline improved. At the same time, companies continue to increase their own activity aimed at tackling the bad debt problem.

Amid the pandemic and the restrictive measures, MFOs actively explored remote channels of servicing customers to ensure their business continuity and the availability of services. The share of online loans rose to 75% in the segment of payday loans and to 22% in the segment of medium-term loans.