Financial Services for Low-income People in Russia: New Challenges of the Economic Boom
This paper studies the microfinance sector in Russia, and examines its regulation and supervision.
High growth rates and unequal distribution of wealth necessitate a new perspective on the role of microfinance in Russias financial system. Findings from the paper reveal that:
- Rapid growth and evolution of financial markets has created new challenges for regulators, although Russia has comprehensive laws that regulate financial institutions;
- Market needs a new, more detailed framework for the classification of financial providers as well as a separate law on microlending;
- Current laws and policies face large-scale reforms;
- Dynamic market growth and technology penetration are rapidly breaking through conservative approach of policymakers.
Although Russian regulators are committed to innovation, they cannot speed up the adoption of enabling policies for non-banks until the inability of banks to reach certain populations becomes obvious. Regulatory issues and appropriate responses to them will become clearer once the current banking sector boom subsides and the size and profile of the unbanked population are better understood.