The Council will limit interest on microloans.
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The Verkhovna Rada on Thursday, September 21, adopted in the first reading bill No. 9422 on limiting the rates of microlenders. People’s Deputy Yaroslav Zheleznyak announced this.
The bill proposes capping the maximum rate at 1% per day. As of now, it is 2-3% or more,” he noted.
In 2022, the volume of microloans issued fell 2.7 times: from 65 billion hryvnia in 2021 to 23.9 billion hryvnia. Also, out of 144 MFOs that operated on the market before the start of the war, 98 remained.
In 2023, Ukrainians are increasingly accepting microloans. Over the last six months alone, more than 3.8 million microloans worth UAH 18.4 billion were issued.
This is evidenced by data from Opendatabot. For comparison, for the entire 2022, Ukrainians took out microloans totaling UAH 23.9 billion.
It is also known that the total debt of citizens to microfinance organizations reached UAH 8.9 billion.
Background
Due to the unstable economic situation in the country, which was further aggravated by quarantine measures, many Ukrainians have lost their jobs or have had their incomes significantly reduced. As a result, already popular microloans in the country have become even more attractive to many.
Bright advertising, the location of credit kiosks in crowded places, or even the ability to get such a loan online, the promise of quick provision of money “before payday” without the need to confirm income – all this encourages a person to spend more in a month than he earned. But as you know, we borrow other people’s money temporarily, but give ours away forever.
Unfortunately, many people, with such a simplified procedure for obtaining loans, take lightly the need to carefully study the terms of provision of funds, which, as a rule, stipulate additional commissions and payments, “painful” penalties for delay in repaying the loan, as well as interest rates for use it, which significantly exceed market prices. The consequences of such inattention, as a rule, drag borrowers into a deep debt hole, from which it is difficult to get out with small losses, since the total costs of such a microloan, taking into account all penalties and interest, can be multiples of the loan amount.
Source: Racurs
I am David Wyatt, a professional writer and journalist for Buna Times. I specialize in the world section of news coverage, where I bring to light stories and issues that affect us globally. As a graduate of Journalism, I have always had the passion to spread knowledge through writing.