Words pay no debts: “Banks are lending themselves”

Almost all bankrupt people in Tatarstan have five or six loans, the total payments of which exceed incomes

The number of bankruptcies of natural persons has increased by 70% in Tatarstan compared to last year, and eightfold — compared to the first year of the relevant law. The surge is observed throughout Russia, and, according to the World Bank, the situation may worsen in the near future. The international financial organization has estimated that 60% of borrowers in our country have difficulties with payment of loans. At the same time, almost two-thirds of Russians have problems with repayment of loans. More than half of citizens are excessively credited, and more than a third — should not have been given loans at all. Realnoe Vremya listened to experts on how to prevent the financial collapse of the most vulnerable segments of the population and why it is still too early to panic.

Clients of MFIs and banks save on food

More than half of Russian borrowers suffer from excessive debt overburden. More than a third of them should not have been given loans at all — concluded the authors of a joint study of the World Bank and Rospotrebnadzor. Now 60% of Russians have difficulties with repayment of debts. Representatives of the Bank of Russia and the financial ombudsman got acquainted with a brief presentation of the analysis, and the final version of the report is to be published by the autumn.

The study covers 16 regions, 4,013 people interviewed. It was found 9% of borrowers in Russia already have delinquencies. A tenth of the borrowers had to restructure or extend the loan, or the banks refused them. 14% had problems with payment of interest. More than 25% of citizens spend three-quarters of family income to pay for loans, daily expenses and utilities.

Those borrowers found themselves in a difficult financial situation who borrowed not in banks but in microfinance organizations (MFIs). Two-thirds of their clients have difficulties with payments. The situation is even worse for those who are credited both in a bank and in an MFI — almost half of these families save on food to pay their debts.

Consumer loan remains the most popular type of credit. Citizens with an income of more than 70,000 rubles most often take out a loan for the purchase of furniture and household appliances, the second popular loan among them is the mortgage. Poorer Russians usually take out loans for everyday expenses.

The army of bankrupts to grow eightfold?

In Tatarstan, as well as in Russia as a whole, the number of bankrupt natural persons has been growing for the fourth year in a row. According to the Unified federal register of information on bankruptcy, in the republic from the beginning of the year to June 11, by 70% more citizens have been recognized as financially insolvent than a year earlier or in previous similar periods:

• 2016 — 80 people,

• 2017 — 344 people,

• 2018 — 392 people,

• 2019 — 661 people.

In other words, after the law on personal bankruptcy was passed (October 2015), the army of Tatarstan citizens, who suffered a financial collapse, has grown eightfold. In the country as a whole, the number of bankruptcies increased by almost 50% last year, and the amount of creditors' claims exceeded 762 billion rubles. What is more, the number of potential bankrupts in Russia is almost seven times more than the number of citizens already recognized as insolvent. However, experts in the banking sector are not yet inclined to dramatize the situation.

“So far the situation in the retail lending market is not critical. Why? As of May 1, the retail delinquency amounted to 805 billion rubles, or 5,1% of the debt, which is quite a moderate indicator. In addition, the annual growth of retail lending on May 1 was 23,8%, while before the last crisis (2014-2015) the growth rate reached 44,4% (as of July 1, 2012). The bubble in the retail loan market is being inflated, but a critical situation is clearly far away,” said Head of the analytical department at BKF Bank Maksim Osadchy.

Second, in support of his words, the interlocutor of the publication cited data on the loan delinquencies of Russian borrowers. As of May 1, it amounted to 805 billion rubles, which corresponds to only 5,1% of the total debt and is also not critical. The achievement of this indicator of 10% and above is considered alarming. Third, the problem can be judged by the growth rate of retail lending. “Of course, it looks quite unpleasant — 23,8% (as of May 1 in annual terms), but if we compare the data with the period of the crisis in 2014, then the growth rate reached 44,4%. So this is still far from it.” In other words, all three indicators are not yet a source of serious concern.

“Therefore, we can assume that in the short term, a crisis does not threaten the retail lending market. In 2019 — zero probability, in 2020 — very low. However, at 2019 SPIEF, Minister of Economic Development Maksim Oreshkin declared a possible recession in 2021 because of the high growth rate of the unsecured consumer credit, and this forecast has the right to existence,” Osadchy noted.

“Growth due to that banks are lending themselves”

Arbitration Manager Anvar Aynutdinov, who had to deal with the bankruptcies of natural persona many times, also noted the surge of personal financial collapses of Tatarstan citizens this year.

“We have a very large increase in non-secured lending. While the real incomes of the population either are not growing or declining. If we take the statistics of consumer and mortgage lending, there are usually two-digit growth figures. This is because the banks grant unsecured loans, and they are usually issued to borrowers to repay previous loans,” said Aynutdinov.

A vivid example is one of the “freshest” bankruptcies in the region — Amir Mubarakshin from Kazan. The man owes 1,6 million rubles to 18 MFIs and banks. The borrower does not have the status of an individual entrepreneur, is not married, without children, but at the same time “is not able to satisfy the creditors' claims, since the amount of debt exceeds the value of his property. The debtor owns a share in the apartment at the place of registration,” the court ruling says.

“In my practice, I can't think of any of the bankrupt among natural persons who had at least one or two loans. As a rule, the average number is five or six loans, and maybe eight or nine or more. That is, this growth in consumer lending is due to that banks are lending themselves. Because people are re-credited to repay the debt in another bank. Or the same bank gives him a new loan, but more. Naturally, sooner or later such a system of lending leads to that a person cannot service their loans. Very often, it happens that the total amount of payments on debts exceeds the income of a citizen,” said the arbitration manager.

In the field of housing lending, the Central Bank of Russia has already taken measures to tighten the conditions for issuing loans to prevent the inflation of the mortgage bubble in the market. However, a reduction in the volume of retail lending, in the first place, would hit the creditors themselves, said the interlocutor of the publication. “Relatively speaking, a large-scale crisis may be due to that people will not be able to serve this huge credit mass. In recent years, we have lived in a stable economy, but as soon as the problems begin, bankruptcies will amount not to hundreds of thousands, but to tens of millions of rubles.”

By Vasilya Shirshova

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Analytics Tatarstan