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Institutions providing microfinance services in Russia include formal institutions (banks, non-bank credit institutions, credit cooperatives and state/municipal development funds) and semi-formal institutions (which take several organizational forms and play a major role in the industry). Banks and non-bank credit institutions are regulated by the Central Bank of the Russian Federation. Credit cooperatives are not regulated at the federal level; however, states may regulate credit cooperatives through state-specific laws. Finally, several state and municipal small and medium enterprise support funds exist and are regulated by state, regional, and federal governments. Microfinance organizations are governed by a legal framework adopted in July 2010, under which the Ministry of Finance issued prudential regulations for microfinance organizations and the Federal Service for Financial Markets (FSFM) established and maintains a federal register of microfinance organizations. The FSFM also maintains federal registers of other relevant entities, including consumer credit providers and credit bureaus.



Microfinance & Banking

Consumer Protection

The issue of consumer protection in the financial market has increased in importance recently with the development of consumer finance and insurance. There is neither specific regulation nor a specific public authority supervising consumer protection in the microfinance sector.  Federal Law No. 2300-I of 1992 on Protection of Consumer Rights lays down general provisions to protect consumers of marketed products and services. The authority to monitor compliance with the law is delegated to a special federal service (Rospotrebnadzor). 

There is currently no specific legislation governing consumer credit, collection activities, and the bankruptcy of individuals. Numerous cases of abuse have been reported in these spheres. In the absence of specific legislation, interpretations of the broader Civil Code provisions made by supervising authorities and higher courts are particularly important. In recent years, provisions were added to the Federal Law No. 395-I of 1999 on Banks and Banking Activities to ensure disclosure of the full cost of credit and to regulate the procedure of changing interest rates on consumer loans and deposits.

A Deposit Insurance Agency has been established in the form of a state corporation and authorized to protect the rights of depositors and compensate them in the event their bank goes bankrupt. Bank deposits of natural persons are insured for 100% up to 700,000 rubles (about 24,000 US dollars). 

Natural persons investing in securities are protected by a special Federal Law No. 46-FZ of 1999 on Protection of Investors Rights and Lawful Interests on the Securities Market. From a legal point of view, such investors are not recognized as consumers. The responsibility to monitor compliance with this law is assigned to a special oversight body, the Federal Service for Financial Markets (FSFM), but FSFM is not a mega-regulator and is only responsible for the securities market. In addition to FSFM, there is the Federal Antimonopoly Service, which is active in monitoring compliance with the Federal Law No. 135-FZ of 2006 on the Protection of Competition. This law was designed to ensure the free movement of goods, protection of competition, and freedom of economic activity in the Russian Federation.

Supervision over credit cooperatives is exercised by self-regulatory organizations, which in turn are overseen by the Ministry of Finance. This system of supervision is still under construction, since it was established by the Federal Law No. 190-FZ of 2009 on Credit Cooperation.

In general, the regulation of consumer protection in the Russian financial market can be described as fragmented rather than systemic. Certain universal approaches applicable to different segments of the financial market (banks, insurance, and investment in securities) are still being developed. 

Branchless Banking