Banks do not hurry to cut rates on retail credits

Since the 1st of July of the current year the Consumer Credit Act has come into force, which is focused on borrower’s rights protection. According to the passed law, the Bank of Russia will limit the maximum full amount loaned (FAL) of retail credits. The medium-term values of FAL will be published quarterly since the 14th of November 2014.

The mechanism of determination of the maximum value of FAL will be as follows: the Central Bank will estimate the mid-market FAL every three months, relaying on the data of 100 the biggest retail organizations. Herewith banks will be forbidden to exceed the FAL more than by one third from the recommendation of the main regulator. According to preliminary estimates of the Bank of Russia, the interest on credit cards should not exceed 45,9%, and on cash loans – 34,6%. However, banks don’t hurry just yet to approximate the cost of credits to the recommended values.

According to experts’ estimates, 20 from 100 the biggest retail banks have rates on credits being higher than the recommended level. Record-holders on the value of non-purpose credits became “Rusfinansbank” and “Alfa-bank”, with maximum rates 98,3 and 86% respectively. Maximum rates on cards were presented by “Renessans Kredit” and “MTS-bank”, with rates 79 and 55% respectively.

Representatives of the banks note, that such high rates on retail credits are explained by the difficult economic situation and high risks. At the same time the prominent players of the market of retail lending state, that they will bring the rate of FAL to the recommended values in the nearest time, in order to meet fully the requirements of the regulator. However, it goes no further than the statement just yet; so, for example, only in July of the current year 8 banks increased interest rates on retail credits (4 on credit cards and 4 on cash loans) and only one bank announced about the reduction of rates on credit cards.

The experts note, that forced reduction of rates will lead to that a number of prominent players will leave the market, and in the future the segment of the retail lending could be hold by microfinance organizations.

See also: Banks want to get more information about borrowers