17.11.2016, 09:51
Economic Ratios for Microfinance and Microcredit Companies Developed
OREANDA-NEWS. The Bank of Russia draft ordinance sets a minimum capital adequacy ratio for microfinance companies (MFCs) at 6%, with a minimum liquidity ratio being 100%. Unlike the applicable order of the Ministry of Finance, the document has a procedure for calculating MFC capital adequacy and liquidity ratios with due account of the capital calculation procedure established by the Bank of Russia.
The draft ordinance also envisages the introduction from 1 January 2018 of two new MFC ratios: a maximum risk per borrower (or a group of related borrowers), and a maximum risk per individual related to a microfinance company. These ratios are set at 25 and 20% respectively.
At the same time, the draft ordinance which deals with microcredit companies (MCCs) sets the minimum capital adequacy ratio at 5% with the minimum liquidity ratio being 70%. Similar values are set by the applicable order of the Ministry of Finance. However, the document developed by the regulator envisages heightened requirements for loans and credits recognised as part of MCC capital.
MFO classification as microfinance and microcredit companies is envisaged by amendments to the Federal Law ‘On Microfinance Activities and Microfinance Organisations’ which came into force on 29 March 2016.
MFCs are entitled to issue bonds, to raise funds (from 1.5 million rubles) from individuals who are not their founders (participants, shareholders), and extend consumer microloans worth up to 1 million rubles to one borrower. MCCs can extend consumer loans to households worth up to 500 thousand rubles per borrower. They are not entitled to issue and place bonds, and to attract loans from individuals who are not their founders (participants, shareholders).
Up to 29 March 2017, in the transitional period, all MFOs listed in the state register of microfinance organisations as of the moment the law became effective were recognised as MCC. They can attract loans from individuals who are not their founders (participants, shareholders) provided the loan maturity is within the transitional period. Those MCCs which were included in the register after 29 March 2016 are an exception. Only MFCs can raise funds for a longer term from such individuals.
The draft ordinance also envisages the introduction from 1 January 2018 of two new MFC ratios: a maximum risk per borrower (or a group of related borrowers), and a maximum risk per individual related to a microfinance company. These ratios are set at 25 and 20% respectively.
At the same time, the draft ordinance which deals with microcredit companies (MCCs) sets the minimum capital adequacy ratio at 5% with the minimum liquidity ratio being 70%. Similar values are set by the applicable order of the Ministry of Finance. However, the document developed by the regulator envisages heightened requirements for loans and credits recognised as part of MCC capital.
MFO classification as microfinance and microcredit companies is envisaged by amendments to the Federal Law ‘On Microfinance Activities and Microfinance Organisations’ which came into force on 29 March 2016.
MFCs are entitled to issue bonds, to raise funds (from 1.5 million rubles) from individuals who are not their founders (participants, shareholders), and extend consumer microloans worth up to 1 million rubles to one borrower. MCCs can extend consumer loans to households worth up to 500 thousand rubles per borrower. They are not entitled to issue and place bonds, and to attract loans from individuals who are not their founders (participants, shareholders).
Up to 29 March 2017, in the transitional period, all MFOs listed in the state register of microfinance organisations as of the moment the law became effective were recognised as MCC. They can attract loans from individuals who are not their founders (participants, shareholders) provided the loan maturity is within the transitional period. Those MCCs which were included in the register after 29 March 2016 are an exception. Only MFCs can raise funds for a longer term from such individuals.
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