The prohibition of activities of microfinance institutions (MFIs) can lead to increased demand for the services of illegal lenders, but because to introduce it would be short-sighted, I’m sure the head of the Bank of Russia Elvira Nabiullina.
“The demand for short payday loans, and, unless the regulated business, people will go to illegal lenders,” said Nabiullina (quoted by “Interfax”).
At the same time, speaking in the state Duma, the head of the Central Bank noted that the Bank of Russia takes measures to protect microfinance clients. In particular, a restriction on charging interest and other fees — the aggregate amount of accrued interest on such loans may not exceed the principal amount of more than 4 times, and the limit is to be reduced even by half.
In April 2016, the Deputy of the state Duma Nikolay Gonchar has suggested to change the signs of financial institutions involved in issuing micro loans.
“In these “booths”, where it says “free money”, you need to urgently replace the word “money” with the word “cheese” to finally understand what this place is and what it’s called,” said Gonchar.