Law on loan repayment holidays for participants in special military operation adopted
The law entitles citizens who received mortgages, consumer loans or microloans before the mobilisation or participation in the special military operation (SMO) to have a grace period on loan payments. The same right will be also granted to other SMO participants, including those serving in the armed forces under contract, in the National Guard, and in other organisations and bodies. Their family members will also be able to have grace periods on their outstanding loans. The respective law has been adopted by the State Duma.
Loan repayment holidays shall be granted for the period of contractual service or participation in the SMO plus 30 days based on application.
These holidays can be arranged until the end of 2023. To do this, one needs to apply to a bank, microfinance organisation (MFO) or other professional lender by phone or by other means specified in the loan agreement, for example, by regular post or e-mail.
The application for loan repayment holidays may enclose documents confirming the borrower’s participation in the SMO. However, should the borrower fail to provide documents at the time of application, the bank, MFO or other lender will request them at the Ministry of Defence or other relevant agency. The lender may also request the borrower to provide them (in this case, the borrower should submit the documents after his/her participation in the SMO is over). If the application is filed by family members of a serviceman, they must provide a document confirming their kinship.
The lender will consider the application for holidays within ten days. The application may be rejected only if it is not confirmed that the person has actually been mobilised or is participating in the SMO. If the person has not received an approval or rejection within 15 days, the loan repayment holidays shall be deemed valid from the application filing date.
The bank, MFO or other lender shall send the borrower a new repayment schedule before the end of the loan repayment holidays.
During the holidays, the lender shall not be entitled to charge late interest; and initiated enforcement proceedings shall be suspended. However, interest on the debt continues to accrue as follows:
- for consumer loans and credit cards — at the rate of 2/3 of the average market value of the total cost of credit as set by the Bank of Russia on the date of application for holidays (but not higher than the original interest rate under the agreement);
- for mortgage loans — at the rate specified in the agreement and in a way as if the borrower continued to make payments in full (i.e. the interest accrual basis shall decrease after each payment period).
For both mortgages and consumer loans, the repayment period shall be automatically extended at least for the duration of the holidays so that after the grace period, the amount of monthly payments remains the same as it was before the holidays.
Debt shall be written off if the serviceman dies or becomes a disabled person of group I. All loans and microloans taken out by his/her family members shall also be written off in the above cases. These rules shall apply to situations that have emerged since 24 February 2022.