OREANDA-NEWS. The Bank of Russia changed the status of one of operating microfinance organisations from that of a mictorocredit company into a microfinance one in the state register of microfinance organisations (MFOs).

The division of MFOs into microfinance companies (MFCs) and microcredit companies (MCCs) is stipulated by amendments to the Federal Law ‘On Microfinance Activities and Microfinance Organisations’ effective from 29 March 2016. All MFOs listed in the state register of microfinance organisations as of that date have been recognised as MCCs and shall bring their operations in compliance with the law within a year ending 29 March 2017. MFOs may obtain the status of microfinance companies if they dispose of at least 70 million rubles in equity and have submitted the required documents to the Bank of Russia.

‘We have divided MFOs into MFCs and MCCs and devolved the controlling functions over MCCs to self-regulatory organisations to ensure proportional regulation of the microfinance market and risk-based approach to supervision over its actors’, said Ilya Kochetkov, head of the Main Office of Microfinance Market and Financial Inclusion Methodology of the Bank of Russia.

Experts estimate that about 90 organisations currently operating in the microfinance market seek the status of a microfinance company.

Microfinance companies may issue bonds, raise household funds (of more than 1.5 million rubles) and issue consumer loans of up to 1 million rubles per borrower. Meanwhile, microcredit companies may lend out no more than 500 thousand rubles per borrower and may not raise funds from individuals other than their founders.