Bank of Russia sets consumer loan parameters to establish macroprudential limits
Macroprudential limits (MPLs) may be established depending on a borrower’s debt service-to-income ratio and the loan maturity. An additional parameter for microfinance organisations (MFOs) is the loan amount. The relevant draft ordinance has been developed by the regulator in furtherance of the law empowering the Bank of Russia Board of Directors to establish MPLs for consumer loans (other than mortgage and car loans). The document has been published to evaluate its regulatory impact.
The ordinance sets the factors that will be the basis for the Bank of Russia Board of Directors’ decisions on establishing MPLs. The draft outlines separate procedures for calculating MPLs for loans with a credit limit (including credit cards) and other consumer loans.
In order to mitigate regulatory arbitration risks, the regulator stipulates a limit on the maximum difference between MPLs for banks and MFOs. Furthermore, the document envisages that capital requirements for loans breaching MPLs will be equivalent to a capital deduction. If a bank or an MFO fails to comply with MPLs, their limit in the next period will be reduced by the amount of the violation.
Market participants are welcome to provide their feedback and suggestions until 20 December 2021.