Bank of Russia recommends banks and MFOs notify borrowers of their DBR

The Bank of Russia has sent an information letter to banks and microfinance organisations (MFOs) recommending that they notify borrowers of their debt burden ratio (DBR).

Beginning from 1 October 2019, banks and MFOs are required to calculate a retail borrower’s DBR when granting a loan of over 10,000 rubles (or the equivalent amount in a foreign currency) and increasing credit limit. They must also create additional capital stock when a borrower’s DBR is above 50%.

To enhance borrowers’ awareness, the Bank of Russia recommends that credit institutions and microfinance organisations notify their customers that they are obliged to calculate borrowers’ DBR for the purposes of making a decision on issuing a loan or increasing credit limit.

Banks and MFOs are also advised to notify borrowers that they may use Rosstat's data on the average per capita income in the region where customers are registered to calculate borrowers’ DBR if they do not provide documentary evidence of their income. If the DBR calculated with the use of this data exceeds 50%, it may adversely affect the lending conditions for this customer.