Bank of Russia cancels EIR limit for consumer loans (microloans) from 1 January to 31 March 2025 (25.12.2024)

For the period from 1 January to 31 March 2025, the Bank of Russia Board of Directors decided to cancel the effective interest rate (EIR) limit for all consumer loans (microloans) with respect to credit institutions, consumer credit cooperatives, agricultural consumer credit cooperatives, and pawnshops (taking into account the earlier decisions regarding credit institutions on consumer mortgage loans taken out to purchase (build) housing or land plots and on credit cards) as well as for certain categories of consumer microloans with respect to microfinance organisations.

The Bank of Russia imposes a moratorium in case of a significant change in the market conditions affecting the EIR. The cost of funding for financial institutions has soared since 2024 Q3 due to both the key rate increase and banks’ competition for funds to comply with the liquidity coverage ratio. Since the average market EIR for 2024 Q3 is used as the calculation base for setting the maximum EIR level for 2025 Q1, this limit could lead to less affordable consumer loans (microloans) for households and higher risks of the EIR calculation manipulation.

The risks of borrowers’ heavier debt burden will be limited by the existing macroprudential measures.

The EIR limit will still be applicable to high-risk short-term microloans for small amounts, issued by microfinance organisations.