New law enhances protection of social benefits from debiting as loan repayments

Banks will need to obtain a person’s consent each time to debit one-time social benefits, for instance, benefits to pensioners or families with children, as loan repayments. A person may demand the creditor, whether a bank or a microfinance organisation, to refund debited one-off payments received from 1 January 2021 to 1 May 2022. This law was signed by President of the Russian Federation Vladimir Putin.

An application for the refund may be filed in the next six months, that is from 1 January to 1 July 2022, provided that the relevant loan agreement is still in effect. Creditors are to refund the money within seven days.

Regular social benefits, e.g. to low-income families with children or pregnant women, debited as debt repayments are to be refunded if a borrower submits a relevant application within 14 days after debiting. This is applicable even to the amounts debited upon a borrower’s earlier consent. In this case, creditors are to make refunds within three business days. The provisions of the law regarding regular benefits will become effective on 1 May 2022.

However, in all the cases, borrowers who received refunds should make equivalent repayments on their loans, including interest charged, themselves within seven days. During these days, the debt formed as a result of the refund will not be deemed as overdue and is not subject to any penalties or fines.