Banks extensively deny debt restructuring proposals from the Central Bank, according to recent reports
In the second quarter of 2025, requests for eased credit terms, credit holidays, and debt restructuring in Russia surged significantly compared to the same period in 2024. This surge was primarily due to deteriorating financial conditions for Russian borrowers and limited access to financing.
Andrey Barhotka, an independent expert, attributed this increase to a combination of factors, including increased household expenses, rising interest rates, and citizens' re-evaluation of their ability to service loans.
Despite this surge in demand for relief, banks have been largely refusing these requests. In 2025, they approved only 20% of applications, a decrease from 31% the previous year. This indicates worsening borrower stress paired with tighter lending practices by financial institutions.
The macroprudential limits, introduced by the Central Bank on July 31, 2025, are part of the Bank's efforts to maintain financial stability. These limits target borrowers with a maximum debt-to-income ratio (DTI) of over 80%. The limits will apply to loans for individual housing construction (IHC) and unsecured consumer loans.
Natalya Milchakova, the leading analyst at Freedom Finance Global, pointed to the end of subsidized mortgages on July 1, 2024, and uneven wage growth across regions as contributing factors to the increase in requests for eased credit terms.
The macroprudential limits may have an impact on the housing and consumer loan markets in the future. They are intended to regulate borrowing in these sectors and may affect the availability of loans for IHC and unsecured consumer loans. The limits will come into effect on October 1, 2025.
It's worth noting that this is the first time the Central Bank has introduced macroprudential limits. Debt restructuring, such as credit holidays, is a relaxation of contract terms for borrowers, which can include deferring payments for up to six months without penalties or seizure of collateral. The loan amount for debt restructuring should not exceed the legally established limit, such as 450,000 rubles for cash loans.
Requests for debt restructuring under banks' own programs grew by 87%, to 1.5 million, in the April-June 2025 period. Russians submitted 233,800 applications for credit holidays in the same period, a 2.2x increase from the same period in 2024.
However, the Central Bank attributes the denial of credit holidays to the lack of legally established documents proving a deterioration in the borrower's situation.
Russia's economy faces severe external financial constraints due to ongoing sanctions and restricted access to international capital markets. These sanctions limit Russia’s ability to engage in global financial transactions, raise capital, and maintain liquidity. The sustained sanctions regime in 2025, including restrictions on key banks and sectors, keeps financial conditions tight for businesses and individuals alike.
Further aggravating factors include high interest rates (around 21%) that stifle private investment and increase debt servicing costs, limited access to international financial systems (e.g., SWIFT) and continued sanctions on Russian financial institutions that restrict credit availability, economic contraction projections and sector-specific challenges impacting cash flows and repayment capacity, and limited relief options despite regulatory easing, as banks remain wary of risk and tighten credit standards.
In summary, the increase in requests for eased credit terms reflects growing financial distress among Russian borrowers amid a strained economic environment shaped by sanctions, high interest rates, and limited banking support. Banks’ increased refusal rates indicate a reluctance or inability to provide relief, exacerbating borrower difficulties. The macroprudential limits are a response to increasing debt levels among borrowers and are intended to help maintain financial stability in Russia.
- The surge in requests for eased credit terms in Russia's finance industry can be linked to the challenging business environment, as high interest rates, economic contractions, and limited access to international financial systems, particularly due to ongoing sanctions, strain the repayment capacity of borrowers.
- The increased denial of credit holidays by banks can be attributed to the lack of legally established documents proving a deterioration in the borrower's financial situation, which suggests stringent lending practices in the banking-and-insurance sector, making it difficult for Russian borrowers to seek relief during times of financial distress.
