Sberbank, VTB and ALFA-BANK to assess borrowers’ incomes more accurately when issuing loans
The Bank of Russia has permitted Sberbank, VTB and ALFA-BANK to apply their own models to calculate the debt service-to-income ratio (DSTI) for consumer loans.
Since June 2023, the regulator has been accepting for validation models designed to assess incomes of applicants for consumer loans up to ₽1 million from large retail banks. If approved, such models may be used by banks to calculate borrowers’ DSTIs. To this end, these models shall be built on a sample of more than 100,000 borrowers, be accurate and rank the risk of default on loans based on borrowers’ DSTIs.
In June, the Bank of Russia received notices from Sberbank, VTB and ALFA-BANK informing about their preparedness to apply their models. On 2 November, the regulator permitted these banks to apply the model-based approach. These models enable banks to assess borrowers’ incomes more accurately, compared to existing simplified DSTI calculation approaches (based on the average per capita income or data from credit history bureaus).
The Bank of Russia will be evaluating the quality of approved models on a regular basis.