Suffering through a serious recession and unable to get standard bank loans, cash-strepped Russians are turning to largely unregulated lenders — and often paying annual interest of nearly 800 percent.
“Our model is recession-proof,” said Yuri Provkin, head of the country’s biggest payday lender, Bistrodengi — meaning Fast Money in Russian. “Our customers come to us when they bust a tire, if they need to put out a spread for some relative from the village, or when they run out of money on their mobile phone.”
These businesses have sidestepped the official crackdowns that throttled credit and closed many banks. In contrast, Russia’s payday lenders grew by 65 percent in 2016 and tripled the volume of outstanding loans over the last two years.
But that could change.
Patriarch Kirill, leader of 150 million Russian Orthodox and an ally of President Vladimir Putin, recently labeled the microfinance organizations “bloodsuckers” and amoral predators, calling for Russia to create banks that will cater to the poor.