The impact of the pandemic on microfinance market discussed at the expert Council of the market participants

The period of validity of restrictive measures negatively influenced dynamics of microfinance, but in June the demand for small loans has recovered to almost pre-crisis level, it was noted during the Expert Council on microfinance and credit cooperation, which was held on July 14, 2020.

Microfinance institutions are faced with the growth of overdue debts and to minimize losses, tightened risk policies, raising the threshold of loans and thereby preventing the growth of debt load citizens.

Trends in the microfinance market was determined not only by demand factors but also the level of penetration of digital channels of service provision. And if for some MFIs, long-running online restrictive requirements become an additional factor of development, then pawn shops are forced to close offices, as well as PDAs that do not have the opportunity to work online, were in a much worse situation. To support the digital transformation of microfinance, Bank of Russia is working to overcome barriers in the development of the online segment of MFIs, and also engaged in creating a digital platform for PDAs, which will allow shareholders to participate in the cooperative work fully remotely.

Special attention was paid to the regulator to support microfinance institutions in financing small and medium businesses. The SMEs demand for loans to compensate for the period of revenue decline and the cash gaps and the state of the MFI provided additional grants to support small and medium-sized businesses. The Bank of Russia expressed hope that the company will be able to properly dispose of these funds.

The expert Council also discussed the problem of recovery of arrears, the appearance pseudophilosophy organizations by changing the shape of the CCP, as well as mediation services psevdobrokery and ladogeneratory, which were becoming a systemic problem for the microfinance market, and for consumers. The Bank of Russia has offered solutions to these problems.

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