Russia’s Microfinance Sector Doubles Growth to 32% in 2011, Default Rate Stands at 7%

Written by Patrick Fisher April 4, 2012 0 comment


» Posted by  in Category: Eastern Europe and Central Asia,Trends/Challenges at 11:36 am

Microfinance institutions (MFIs) in Russia reportedly disbursed loans of approximately RUR 29 billion (USD 1 billion) to individual borrowers in 2011, representing a 32.2-percent increase from 2010 [1]. In 2010, loans increased by 15.3 percent from 2009 [1]. The 2011 increase is attributed to easier access to funds through MFIs compared with traditional banks, which are currently “tightening their credit policy” [1]. Microborrowers that produce a passport can obtain a loan in approximately 30 minutes, while traditional banks require more documents and a waiting period of up to two days [1]. Common sizes of microloans in 2011 varied from RUR 15,000 (USD 509) to RUR 23,000 (USD 781) [1].

The average interest rate is approximately 27 percent, which is 7 percentage points higher than that offered by Sberbank, a major bank in Russia [1]. This is reportedly due to a higher default rate; 7 percent of microloans are not paid back and “Russian collection agencies marked almost an eightfold increase of applications from micro financing institutions to recover bad debt in 2011” [1].

For the year 2010, 21 MFIs in Russia reported to the US-based nonprofit Microfinance Information Exchange (MIX) an aggregate gross loan portfolio of USD 156 million outstanding to approximately 53,700 borrowers and total deposits of USD 103 million.

By Brendan Millan, Research Associate

About Sberbank: Established in 1841, Sberbank is a commercial bank based in Russia that also operates in Eastern Europe. The bank offers a range of savings, investment and lending services. Sberbank reported total assets of USD 319 billion in 2011.