During the III Congress of the Association of Russian Banks (ADB), VTB President and Chairman of the Board, Andrei Kostin, spoke out against excessive administrative regulation of banking activities, comparing the Central Bank’s intention to limit the issuance of consumer loans to borrowed citizens with the idea of the Federal Penitentiary Service (FSIN) to involve in the construction of the Baikal-Amur Mainline (Bam) prisoners.
“Now the FSIN, by the way, has suggested that the prisoners build the BAM. Everyone says: it is good for both the prisoners and the economy. But somehow goosebumps go, no matter how this experience spreads more widely in our country, ”said the head of the credit institution. “Of course, maybe such a comparison is not entirely adequate, but nevertheless, I would still like the Central Bank to rely more on economic methods in its regulation, especially since there are a lot of them, and still did not resort to broad the range of administrative restrictions, “he explained (quoted by Interfax).
Similarly, Kostin spoke about the initiative of the Central Bank at the legislative level to give its board of directors the right to establish for banks the maximum share of high-risk types of loans – consumer loans and microloans, which they can issue to borrowers with a high level of debt burden during the quarter. The regulator announced the elaboration of this norm on January 20, and on March 24 the corresponding bill was submitted for consideration to the State Duma.
Central Bank Chairman Elvira Nabiullina, who also attended the ADB congress, expressed satisfaction that the Russian government had agreed on the bill. Kostin, on the other hand, expressed concern about the creation of a precedent for the transition from economic methods of regulation to “strictly administrative” and stressed that such a principle raises VTB “some doubts.”
Yesterday, the Central Bank reported that by April 1 of this year, the level of the debt burden of Russians has renewed its historical maximum, reaching 11.9%. By the same date in 2020, the figure was 10.9% and at that time was a record. The regulator explained that the main reason for the growth of this value lies in the fast pace of consumer lending, which is disproportionate to how the income of the population is increasing. The latter, according to Rosstat, in the first quarter of this year decreased by 3.6% in annual terms.