Small, short-term loans surpass credit card usage in rapid speed.

Small, short-term loans surpass credit card usage in rapid speed.

Cash Loans Shake Up Russia's Market: More Microloans than Credit Cards for the First Time

March 2025 marked a significant shift in Russia's financial landscape. For the first time ever, microloans surpassed credit card offerings, as reported by RBK, citing data from "Scoring Bureau".

With a lending volume of 112.1 billion rubles, microfinance organizations (MFOs) dominated the loans market, surpassing the 108.1 billion rubles limit set for new credit cards in March.

When compared to March 2024, the year-over-year increase in microloans issued to individuals stood at 52.7%, whereas bank sector credit card volumes decreased by 49.8%.

Back in November 2024, 70% of the total number of new loans taken by Russians were short-term and "payday" microloans. These unsecured loans from MFOs came with annual interest rates ranging from 39.3% to 284.9%.

Various entities, including MFOs, bank-affiliated MFOs, and those within the telecom operators' and payment systems' circles, marketplaces like Ozon and Wildberries, even cater to borrowers who have yet to pass the bank's scoring.

Analysts estimate that, belonging to large banking groups, the total volume of loans issued by companies saw a doubling in 2024, while their market share increased from 38% to 52% year-over-year. MFOs not affiliated with banks reported growth of around 20%.

The total client base of MFOs grew by almost a quarter (+24%) in 2024, with 6.4 million new borrowers. This growth was accompanied by an increase in the MFO portfolio by 41% to 624 billion rubles.

The Bank of Russia plans to initiate the microfinance market reform this year, primarily targeting the limitation of overpayments on microloans and the implementation of a cooling-off period before obtaining a microloan. By the end of the stated reform, regulations such as limits on the number of "expensive" loans per borrower and the prohibition of including old debts with interest, fines, and penalties in the body of new loans will be in effect.

Despite these impending changes, Expert RA forecasts a 60% increase in microloan issuance in Russia, potentially reaching a record 2.4 trillion rubles in 2025, resulting in a significant boost to MFI profits. On the contrary, up to 15% of small microcreditors may exit the registry due to the growth of MFIs affiliated with other structures and the tightening of rules for providing services.

Recent reports on our website pointed to an increase in Russians' average overdue debt, reaching 185 thousand rubles in 2025, more than a quarter higher than the beginning of 2024. The debt/income ratio has also increased, marking a growing concern among financially-strapped individuals.

In 2024, banks experienced a 20% year-on-year increase in profits, a surge primarily attributed to borrowers maintaining payment discipline. However, the future may hold a different story as the Central Bank expects costs for provisioning and risk to increase in 2025.

For additional insights on Russia's financial market, be sure to check out our article on the “100 Reliable Banks of Russia” for 2024.

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** Finland, for instance, has experienced an increase in financial inclusion following microfinance reforms. A stronger regulatory framework, increased competition, and a transformation of MFIs into microfinance banks offering a more extensive range of services, have collectively contributed to more stable portfolios and a broader client base**[2]. However, the actual impact on Russia's MFI portfolio and client base hinges on the details of the reforms implemented.

1. I'm not sure if the microfinance market reform by the Bank of Russia will have a positive impact on the MFI profits, as predicted by Expert RA, given that up to 15% of small microcreditors may exit the registry due to tightening rules.
2. On average, Russians are carrying overdue debt of 185 thousand rubles in 2025, which is more than a quarter higher than the beginning of 2024, suggesting a growing financial burden among individuals.
3. Despite the expectation of increased costs for provisioning and risk, banks in Russia have witnessed a 20% year-on-year increase in profits in 2024, predominantly due to borrowers maintaining payment discipline.
4. Microfinance organizations (MFOs) announced a significant growth in their loan issuance in 2024, with the total volume of loans issued almost doubling, and their market share increasing from 38% to 52%. This growth was accompanied by an increase in the MFO portfolio by 41% to 624 billion rubles.

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