Russia to allow participants of war in Ukraine to avoid paying interest on loans
Pravda Ukraine
The Ministry of Finance of the Russian Federation proposed to allow participants of the war in Ukraine (or, as Russians call it, “special military operation”) not to pay interest on loans; The Russian government approved the bill.
Source: Russia newspaper Izvestia with reference to sources
“Since 7 October 2022, military personnel and their family members have been granted the right to credit rest, during which they are exempt from paying off credit without being charged penalties and fines. The benefit is valid during service and hospital stay plus 30 days, and at the end of the term, interest is added to the debt amount in the amount of 2/3 of the average market size of the full loan cost.
According to the bill, after the end of the credit rest, the military will have to return only the main part of the loan to banks without interest,” the report says.
Banks will also have to recalculate the deposit already received on loans to war veterans, redirecting the funds to the principal or repaying other clients’ loans.
According to the bill, the state plans to reimburse Russian banks for 50% of the lost interest income, and about RUB 5.7 billion (about US$44,2 million) will be allocated from the budget for this purpose.
At the same time, the total amount of interest payments that banks will have to forgive will amount to about RUB 11.4 billion (about US$88.4 million)
The final losses may amount to more than expected, the newspaper writes. So, lenders must do much work to recalculate all such loans. According to experts, as a result, the approvals for new loans to war veterans may be reduced.
Market participants added that it is more profitable for banks to approve fewer loans than to take an increased burden on their capital.
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