In the first half of 2019, the debt service ratio for consumer loans of the population increased from 8.3 to 8.8 percent, which is close to the peak values of the crisis in 2014, when the rate reached 9.3 percent, according to Bank of Russia.
This ratio is calculated as the scheduled loan payments to disposable household income. Than percent higher the harder it is for citizens to endure the credit load.
Unsecured consumer loans are the main contribution to the increase in the debt load of Russians. From January to June, it rose from 9.9 to 10.4 percent, but this lower figure as it takes into account and do not have the credits citizens.
The Central Bank has promised to use the new allowances for the risk factors to limit “Pro-cyclical risks associated with the increased debt load of the population.”
Central Bank and the government has repeatedly expressed its concern at the growth of debt load of Russians. In October, the regulator introduces a scale of allowances for the risk factors in consumer credits, which depends on the current debt load of the borrower and the total loan value. It is expected that this scale will force banks to reduce lending. Earlier, the Bank of Russia has raised the allowance — the latest increase came into force on 1 April, but credit growth has not slowed down.
Also, the regulator is going to change the evaluation system of individual credit rating (IFR) individuals that will be done using a single scale mapping of ratings by different credit bureaus. This should help banks better to assess the viability of the borrower.