Personal debt problem in Russia

RUSSIA / FSU POLITICS - In Brief 18 Oct 2020 by Alex Teddy

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On October 15 a report was published on debt in Russia. Overdue loans are at an all time high. 12.5 million loan repayments are over 90 days behind. The National Association of Professional Collection Agencies revealed this. The credit bureau Equifax was also involved in the study. A further million borrowers would easily fall behind by the end of 2020. That would mean 17% of loans are non-performing.The pandemic has caused this. People have been forced to borrow and have no means to pay off their debts. Overdue loans have increased 12% Y o Y. Crimea has the highest rate of overdue loans. USD 77 billion of loans have been restructured. That is about 10% of corporate and retail loans. That is due to a governmental scheme.The Central Bank of Russia has loosened regulations on banks' cash reserves to cope with possible losses. The government does not want a drop in liquidity.The loan book of loans has increased 10% from January to August 2020. The banking system is healthier than in previous crises. The sector has been improved by the Central Bank of Russia.The sector needs about 40% of its USD 75 billion in capital on the balance sheet in 2021. That will allow it to comply with regulations.The reserves match the value of the restructured loans. The sector can cope with a rise in bad debt. The banking system is not under threat. Some individual banks might have serious trouble though.Sberbank issued 35% of all loans. It issued 47% of the sector's tier 1 capital. That show health it is.A lot of payday unsecured loans were issued in the last few years. It was ridiculously easy for any citizen of Russia or Belarus to get a loan. But the level of personal debt is low by world...