In 2023, Russians took out a record-breaking one trillion rubles (approximately $11.2 billion) in payday loans — 30% more than in 2022. Some experts predict that this figure could increase again by as much as 25 percent in 2024. By the end of 2023, the number of Russians using “microfinance organizations” (MFOs) had reached 19.9 million, which is 2.7 million more than in the previous year. And as of the end of the first quarter of 2024, about 32 percent of these loans were overdue.
Currently, the average monthly income of Russians applying for payday loans is 50,000 rubles, or about $562, while the average size of these loans is 9,990 rubles ($112). In general, Russians turn to payday loans to purchase food and clothing as well as to pay off older loans, economist Nikolai Kulbak told Holod. Most people who use payday loans in Russia use them more than once: in 2023, about 83.4 percent of payday loan recipients were repeat customers.
Kulbak told Holod he also expects to see a continued rise in the number of payday loans being issued in Russia. “Banks used to give loans even to clients who were already devoting most of their income to paying off existing loans; now they’re increasingly refusing people,” he said, adding that he expects the trend to persist for the next six months since inflation does not seem to be slowing down. “The fewer loans banks approve, the more people turn to MFOs. Ultimately, this leads to an increase in bankruptcies,” said the economist.
In addition to the traditional personal bankruptcy process, Russian law allows certain categories of the population, such as pensioners, to go through a simplified, out-of-court bankruptcy process. More than 12,000 people initiated this process in the first quarter of 2024 — more than five times the number of people who did so in the same period the previous year. The number of judicial bankruptcies rose by 18.2 percent to 89,800 over the same period.