In Russia, the number of MFIs working illegally has grown by one and a half times over the year. According to Kommersant, every fifth microfinance organization, upon being excluded from the Central Bank’s register continued its activities “in the shadows”.
According to a study by the Zaim.com portal, out of 250 MFOs excluded from the Central Bank’s register in the first half of 2020, 18.5% did not stop issuing loans. Only 6% of them have done it legally by registering a new legal entity and 12% decided to go into the shadows – this is 3% more than last year’s figures.
The majority of “shadow” MFOs (77%) lost their registration by their own initiative, they could not manage to adapt to the new regulatory requirements against the backdrop of the outbreak of the coronavirus crisis and decided to leave the legal field. The work of such illegal immigrants has noticeably intensified after the lifting of restrictions related to COVID-19.
Officially operating MFOs emphasize that the growth in the number of illegal companies greatly harms the microloan market, and demand tougher penalties for such activities. However, the issue of introducing criminal liability for the issuance of “shadow” loans which considered by the Duma back in 2019, is still far away from being review seriously with final decisions.
As long as usury remains profitable for the bourgeois state, bringing huge profits to businessmen, it is unlikely that they will consider “tightening the screws” seriously. The demands of officially registered MFOs will rather remind us of a reluctance to give part of the profit to competitors, rather than concern for consumers.
After all, any capitalist cares primarily about their profit and then about everything else.