Creditors may not demand early repayment of consumer loans on grounds not stipulated by law

The Bank of Russia has notified creditors that they may not demand that borrowers repay their consumer loans ahead of schedule, except for cases approved by law. This information is given in the information letter the Bank of Russia has sent to credit institutions, microfinance organisations, consumer credit cooperatives, and agricultural consumer credit cooperatives.

In the course of conduct supervision, the Bank of Russia revealed that some creditors stipulate in their agreements with borrowers that they are entitled to demand early repayment of consumer loans in some cases, such as deterioration of a borrower’s financial standing or emergence of circumstances evidencing such deterioration. Some financial institutions also deem it proper to demand early loan repayment in cases where a loan was taken out by an employee who terminates labour relationship with the company. In some cases, changes in a borrower’s registered location and other data not communicated to a creditor may also be grounds for demanding early loan repayment.

The Bank of Russia reminds creditors that they may not infringe upon borrowers’ rights by including early cancellation grounds not approved by law in consumer loan agreements and by demanding early repayment on such grounds.