Russia is slipping into a big debt hole

2024 Author: Seth Attwood | [email protected]. Last modified: 2023-12-16 15:55

Many Russian media outlets have published interesting data contained in a recent study by the credit bureau Equifax. The study provides statistics on loans taken by the population of the country, and resulting from such lending debts.

The following research figure is most often reproduced: in the first 6 months of 2018, the number of loans taken in Russia to repay old loans increased 1.7 times compared to last year. In absolute terms, the amount of such loans in the first half of the year amounted to 68.3 billion rubles. And the number of lending agreements for previous debts increased by more than 1, 4 times - from 92 thousand in 2018 to 131 thousand. According to the results of the first half of 2018, the average amount of a "secondary" loan began to amount to 520 thousand rubles, which is 17% more than in the first half of last year. The stock of "secondary" loans continues to grow in the second half of 2018 (not covered by the above study). So, in July, the volume of on-lending amounted to 14.6 billion rubles - twice as much as in the same month of 2017.

Some experts have already rushed to reassure the public. Like, there is nothing wrong with that. No new loans were issued, they say. These are old debts, they are simply prolonged. What is taking place in the language of bankers is "debt refinancing." Some even called it "debt restructuring." But from the point of view of sane financiers, the picture is alarming, if not scary.

FirstlyThe figures cited in the study indicate the growing insolvency of the population, and this, as you know, is a harbinger of a creeping economic crisis.

Secondly, debt refinancing inevitably increases the amount of an individual's liabilities. At a minimum, a new loan is issued at interest not lower than those that were in the previous loan agreement. And most often, given the client's problems, they are higher. Thus, it becomes even more difficult for the client to extricate himself.

It is possible that by hook or by crook he will be able to get a third and even a fourth loan to pay off the growing debts. And this is a direct road to debt. True, there are no longer any debt holes either in Russia or abroad. This means that the bankruptcy of an individual looms ahead. The institution of such bankruptcy began to operate in Russia on October 1, 2015. Bankruptcy proceedings can be initiated by both the creditor and the debtor. Some citizens think that this is a loophole that they can dive into in the event that they are completely entangled in debt. Many young people think that this is the "magic wand" that can save them. But, firstly, bankruptcy will make it possible to clean up the remains of the debtor's property, with which it will be possible to at least partially satisfy the creditor's claims. And, secondly, and more importantly, it provides for the truncation of a person in his rights. Going through bankruptcy will be considered a person with a “bad credit history”. And this is even worse than in Soviet times the status of a person with a criminal record.

Such a person (if the court decides so) is deprived of the right to travel abroad. By the way, already more than a million Russian citizens are prohibited from leaving the country because of debts. The bankruptcy bank accounts will be monitored constantly (what if there will be money that can be used to pay the outstanding amount of debt?). In fact, he will not be able to receive loans for five years. And also hold leadership positions in the management of companies and organizations and even indirectly participate in their management. I think this is just the beginning.

The list of restrictions on the rights of citizens who have gone through bankruptcy will, in my opinion, expand. So what about the second article of the Constitution of the Russian Federation, which states pathetically: “A person, his rights and freedoms are the highest value. Recognition, observance and protection of human and civil rights and freedoms is the duty of the state”, will soon have to be forgotten. For the sake of completeness, I would like to remind you that the construction of a “digital society” is progressing at an accelerated pace in the country. A “digital” (electronic) “cap” will be created, under which every step of a person with a bad credit history will be monitored. He will not be physically in debt, but in a sense he will be a prisoner. Prisoners in a virtual "electronic prison".

The wave of bankruptcies of individuals is growing. In 2015, there were 2,400 of them. In 2016 - already 19, 7 thousand, in 2017 the number of bankruptcies increased to 29, 8 thousand. In the first half of 2018 - 19, 1 thousand. It can be expected that by the end of this year the figure will exceed 40 thousand. In the spring of this year, an estimate of the number of potential bankruptcies at the end of the 1st quarter was published - 702.8 thousand. Where does such an exact figure come from? This is the number of borrowers with a debt of more than 500,000 rubles. and a loan delay of 90 days or more. By law, these are the minimum formal indicators, upon reaching which you can file for bankruptcy.

I have not yet come across more recent estimates, but I think that taking into account the growth of all indicators of the indebtedness of individuals in the subsequent (after the end of the first quarter) months at the beginning of November 2018, the number of potential bankrupts has already reached the level of one million people. As of January 1, 2018, there were 34 bankrupts per 100 thousand people in Russia. And one million bankrupts is already 680 people per 100 thousand.

In Russia there is such an organization as the Federal Bailiff Service (FSSP of Russia). This is a federal executive body that carries out the functions of ensuring the established procedure for the activities of courts, the execution of judicial acts, acts of other bodies and officials, as well as law enforcement functions and functions of control and supervision in the established field of activity. The FSSP of Russia is subordinate to the Ministry of Justice of the Russian Federation. The number of employees of this organization is almost 75 thousand people. The annual budget is about 40 billion rubles. For comparison: the Ministry of Justice, which is subordinate to the FSSP, has a staff of about 3,500 employees, and the annual budget is about 5 billion rubles.

What does such a "monster" as FSSP do? Mainly in that it helps domestic usurers to knock out money from debtors. There are, of course, tax debtors. But in addition, these are debtors for housing and communal payments. And there are especially many loan debtors. It is clear that even 75 thousand employees will not be enough for this.

The fact that the bailiffs have cases above their throats is evidenced by the statistics of the FSSP. As of September 1, 2018, bailiffs of Russia collected 4.5 million debts to credit institutions for 1.7 trillion. rubles. There are 60 loan debts per employee of the service! It can be expected that the wave of "secondary" loans will increase the workload of bailiffs, the Ministry of Finance will have to increase allocations for the activities of the FSSP and the expansion of the organization's staff.

According to the FSSP, the bulk of judicial penalties imposed on individuals fall on citizens in the age groups from 30 to 50 years old. The share of young people (i.e. persons under 30) is not large. But here's what is surprising: as soon as a young man receives a notice of recovery from the bailiff service, he immediately initiates bankruptcy proceedings. The National Bankruptcy Center reports that since 2015, when the bankruptcy procedure for individuals was legalized, the average age of persons starting the insolvency procedure has decreased by 13 years!

Our youth, it turns out, is "without complexes."Young people are ready to receive one or two or even three or four loans (as they are lucky) at the cost of truncating their rights. As modern sociologists and philosophers say, a person of the 21st century, without hesitation, converts freedom into comfort. When applied to young people, it would be more correct to say: in pleasure. True, the pleasures quickly end. And imprisonment - for a long time, and maybe forever. Figuratively speaking, a citizen takes a loan, and after a while after that he ceases to be a citizen. For there is no citizen without civil rights.

In conclusion, I would like to say that the situation with the debts of citizens is even more catastrophic than presented in the study by the credit bureau Equifax. The fact is that in refinancing their old debts, citizens often get refused by their banks. Then they run for a "secondary" loan to other banks. But even there they get a “turn from the gate”. The fact is that today in Russia there are many credit bureaus (such as Equifax), and employees of Russian banks are well aware that they are facing potential bankrupts. Where, in this case, should the desperate citizen run? To a microfinance organization (MFO).

MFOs, unlike banks, issue loans to borrowers with “bad” debts. In the first six months of 2018, microfinance organizations issued 11.1 million loans to the population for 110 billion rubles. The number of loans increased by 19%, and the amount - by 17% compared to the same period last year. On a yearly basis, the number of MFO loans exceeds 20 million. The working-age population in Russia is 83 million. It turns out one loan per 4 able-bodied citizens. In this case, the annual rates can be several hundred percent. It's not even usury. This is usury squared and even cubed. For such interest, in previous centuries, moneylenders were cut off their heads or given another death penalty.

We currently have more than 500 operating banks in the country. But this is only that part of the credit system of Russia, which is in full view and which is constantly discussed in the media. And how many such moneylenders do we have, hiding behind the decent word "microfinance organization"? According to the Bank of Russia, at the end of the first quarter of 2018 there were 2,209 of them. Several times more than banks. But there are also other credit organizations. Here are some numbers that I found on the Bank of Russia website (data as of March 31, 2018): non-bank credit institutions - 44; credit consumer cooperatives - 2530; credit consumer cooperatives - 1188; housing savings cooperatives - 59; pawnshops - 5532. So, in addition to banks, we have a huge number of other credit organizations that are quite legally engaged in usury and hunt for people. Almost 10 thousand.

Plus, there are thousands of usurious organizations that work without any permits at all. This is the so-called "shadow lending", which creates "shadow debts" that the Central Bank can only guess about. In 2015, the Central Bank identified 720 such illegal ("black") creditors, in 2016 - 1378, in 2017 - 1374, and in the first half of this year - 1890. The name of the "black" creditors is "legion". Figuratively speaking, instead of one liquidated "black" creditor, two new ones appear. These poisonous weeds are increasingly taking over the field in which ordinary banks and various MFIs operate. These "black" creditors do not need bailiffs or collection firms at all. They have their own "black" collectors. Which can no longer be distinguished from ordinary bandits. But they, the “black” creditors, also contribute to the fact that the citizens who have become victims of their “services” receive negative assessments from the “white” creditors (what might be the “rating” of a robbed person?).

Taking into account this, not very well-visible side of the general picture of debt, the real applicants for bankruptcy may turn out to be not one million citizens, but many times more. If you do not stop these dangerous trends, then soon the majority of the population will find itself in a giant debt trap.