On Wednesday, the Verkhovna Rada adopted in the second reading and in general the draft law No. 9422 on limiting microloan rates. This decision was supported by 255 MPs.
The law stipulates that the maximum daily interest rate on microloans may not exceed 1% (2.5% for the first 120 days and 1.5% for the next 120 days). Failure to comply with the law's rate limitation will be punishable by a fine of 5,000 to 10,000 tax-free minimum incomes (UAH 85,000 to 170,000) per case.
It is forbidden to enter into a consumer loan agreement with persons listed in the register of gambling addicts if it is known that the loan funds were used to place bets.
The law was initiated by the National Bank. It explained that this was necessary to strengthen consumer protection, as financial companies that provide microloans mostly neglect to check borrowers' solvency, and cover the risk of non-repayment with extremely high interest rates on loans.
Today, this value for microloans averages 2.5% per day, or 913% per annum.
As a result, 90,000 borrowers have incurred unbearable debt burdens in the last six months alone. More than 200,000 borrowers are in chronic debt and have taken out new loans to repay previous ones.