Bashkiria MPs propose to introduce microfinance companies licensing

UFA, 11 February 2016. /Bashinform News Agency, Galiya Nabieva/. Bashkortostan MPs propose to introduce an institution of microfinance activities licensing. The draft law was prepared by elected representatives of the two committees of the regional parliament. The initiative involves an amendment to the federal legislation. At the next plenary session the deputies will consider a possibility of submitting it to the State Duma. The decision was taken at a meeting of the State Committee for Construction, Rule of Law and Judicial Matters.

The draft bill is designed to streamline the activities of microfinance companies and to protect the disadvantaged population from unscrupulous entrepreneurs using usurious interest in provision of micro-loans. It is proposed to introduce a rule on the right of the creditor to carry out an assignment of rights (claims) under the contract of consumer credit (loan) only to the third parties which have a license to carry out banking operations.

In Bashkortostan, the volume of loans provided by microfinance institutions amounted to more than 2 billion rubles in the first nine months of 2015. As of the end of 2015 in the region, according to the National Bank RB, 96 microfinance institutions were registered (413 separate subdivisions). The interest rate on microloan contracts is establishes by such organizations independently. In Bashkortostan, interest rates on microloans contracts may reach 600-900 percent per annum.