Calculation of debt burden indicator

The Bank of Russia has elaborated a concept for calculating a payment-to-income (PTI) indicator for individuals’ debt burden, which will serve as the basis for a new regulation.

The document stipulates the obligation of banks and microfinance organisations to calculate borrowers’ total payment-to-total income (PTI) indicator when issuing any and all types of loans to individuals. The indicator is defined as the ratio of a borrower’s monthly payments on all outstanding loans and borrowings, including new loans (borrowings), to his/her average monthly income over six months.

The concept provides a list of sources of information used to confirm a borrower's income and sets a cap on a loan amount (7 thousand rubles) not requiring the calculation of a borrower’s PTI by the creditor.

The concept draws on the comments and proposals received from representatives of banks, microfinance organisations and associations of financial market participants following the results of the public discussion of the consultative report ‘Risk Assessment of Individual Borrowers Using PTI Indicators’.