OREANDA-NEWSIn July, a record volume of non-targeted consumer loans was issued in Russia, the cost of which turned out to be unprecedentedly low.

In July, banks approved 1.2 million consumer loans, which are considered the most dangerous from the point of view of the formation of a "bubble" due to low requirements for borrowers. The total volume amounted to 409 billion rubles, which is 10 percent more than in June.

The average total cost of a loan (CPC; borrower payments, including bank and third party fees and charges) in June was 16.1 percent (versus 16.7 percent at the beginning of the year). The banks themselves cite positive consumer sentiments among the population as the main reason.

Some economists also refer to the consistent cuts in the central bank's key rate, which serves as a benchmark for the general level of rates in the market, and high competition between credit institutions fighting for clients in a downturn. A certain number of experts consider the CPM figure of 16 percent too high. In the future, it can be further lowered due to more careful control by the Central Bank and improved banking discipline.

The Central Bank regularly takes measures to reduce the volume of consumer loans. In particular, it increases the risk ratios used in calculating the bank capital adequacy ratio: each asset of a credit institution is multiplied by a certain ratio, after which equity is divided by the resulting value. The last time this happened was in October 2019.