Central Bank of Russia reports 2025 Q2 microloan rebound and signals tighter curbs on expensive repeat borrowing

The Central Bank of Russia published its review of microfinance organisation (MFO) market trends for 2025 Q2, reporting that the market expanded as microloans became more affordable. Growth was driven by microloans with a moderate interest rate where the total cost of credit did not exceed 100% per annum, largely through new tranches under opened credit lines used for purchases from marketplaces and online stores, while the share of the most expensive microloans fell to 47.6% of quarterly consumer microloans issued by MFOs, dropping below 50% for the first time. Microloans issued by MFOs linked to the largest marketplaces and settlement non-bank credit institutions again exceeded those issued by independent MFOs for a second consecutive quarter. Portfolio quality deteriorated across both corporate and consumer microloans, with the share overdue for more than 90 days increasing after a long decline, largely due to late payments on consumer microloans originated in 2024 Q4 and 2025 Q1. The review highlights signs of a debt spiral in repeated borrowing: only 11% of microloans issued in that period were repaid in full without customers taking out new microloans, more than half were issued to borrowers who took another microloan after repaying the previous one, and debt increased in 20% of such cases; one in four borrowers in default could not make the first payment due to an excessive debt burden. To reduce over-indebtedness, lenders will be required to use only borrowers’ official incomes when assessing debt burden, limit the number of simultaneous expensive microloans, and introduce a cooling-off period between the issue dates of such loans.