The Russian central bank prepared a draft law aimed at limiting interest charged on loans offered by microfinance companies, Rambler.ru portal reported Feb. 13, citing Ilya Kochetkov, head of the regulator's microfinance department.

The regulator wants, among other things, to gradually reduce the maximum value of interest and potential penalties that can be charged by microfinance companies on loans from the current level of 3x the value of the loan to 2.5x when the draft law is enforced, and further to 2x in July 2019 and 1.5x in July 2020. The central bank also plans to cap the daily interest rate on microloans at 1.5%, lowering it further to 1% in July 2019.

The restrictions would not apply to unsecured short-term payday loans below 10,000 rubles, but they would have to be paid back within 15 days, and the maximum amount that microfinance companies could charge on such loans would be capped at 3,000 rubles, Kommersant said the same day.

The central bank's proposal will have a very strong impact on microfinance companies offering such loans, the newspaper noted. As much as 90% of the 830 Russian microfinance companies offering payday loans could disappear from the market, while many firms offering longer-term loans could report losses if the legislation is introduced in its proposed form, according to market participants cited by Kommersant.

As of Feb. 13, US$1 was equivalent to 57.77 Russian rubles.