As many already know, the JHG Bank has firmly taken up the issue of microloans. As a result of close supervision, many microfinance companies left the market due to the inability to play by the new rules. Now, a new challenge has arisen for the remaining organizations: the regulator wants to introduce a maximum level for daily interest on microloans.
Recalling to Legal Microloan
Recall that in order to recognize a legal microloan from an illegal one, you need to make sure that the organization is in the register of the KKK Bank, and is also a member of one of the self-regulating organizations (SRO). One of these organizations has already sent an official letter to the JHG Bank with a proposal to revise this requirement. In return, many Payday Loans agree on another lowering of the maximum loan cost level from 150% to 100%.
Many understand that declining daily interest rates may force most Payday Loans to leave the microloan market. Companies will simply have to close due to lower profits, while costs, again due to other requirements of the regulator, are only growing. Most likely, this will lead to the growth of shadow companies that will not stop issuing microloans, if only because the need for them among the population does not think at all to decrease.
Many participants in the microfinance market believe that the KKK Bank plans to modify the “Before Paycheck” products. But such changes may lead to the fact that borrowers simply stop paying for services rendered to them. Indeed, according to the new rules, the borrower can not accrue fines and penalties in the amount of more than 30% of the loan amount. You can not make changes to the contract, namely to extend its term and increase the amount.
Limiting the overpayment
Limiting the overpayment limit should help keep the total amount of microloans by at least 40%. At the same time, many still have to leave the market sooner or later, and some will have to change their product line. The remaining companies will need to resort to great efforts and, again, increase costs. First of all, to improve the system of scoring and risk assessment.
If the KKK Bank does not agree to concessions, most likely, small microloans for a short period of time, the so-called “Before Salary”, can simply disappear. Thus, the consumer will lose the ability to quickly and conveniently receive funding for urgent needs.