Lenders sternly resist loosening lending terms for borrowers
In 2025, Russian banks have seen a significant increase in applications for debt restructuring and credit holidays, with a 2.2-fold increase compared to the same period in the previous year. However, banks have become increasingly restrictive, with an estimated 80% of restructuring applications being denied [2].
This hard stance has contributed to a sharp rise in individual bankruptcies, which increased by 36% in the first half of 2025 compared to 2024 [2]. The reasons for this strict refusal include several factors:
- The growing volume of bad loans, or non-performing loans, which has caused financial strain on banks. Overdue loans reached 10.5% for households and 4% for businesses in early 2025 [1][5].
- Several major Russian banks facing worsening loan portfolios and financial weaknesses are contemplating requesting bailouts from the Central Bank, reviving a 2017 rescue fund mechanism to stabilize the banking sector [1][3].
- The rising risk of insolvency among borrowers means banks prefer to limit new restructuring deals to avoid exacerbating their financial risks [1][5].
- The broader economic struggles, including impacts from the war in Ukraine and resultant financial pressures on companies and households, have weakened borrowers' ability to repay loans [4].
This multifactor approach to evaluating applications makes the process of obtaining credit holidays quite complex for most borrowers. Experts, including Natalia Milchkova from Freedom Finance Global, attribute the increase in demand for easing credit terms to the cessation of the preferential mortgage program on July 1, 2024 [2].
During the deferment period, banks cannot charge penalties or seize collateral under the mechanism introduced in 2024. However, the lack of official documents confirming a borrower's deteriorated financial situation is identified by the Central Bank as the main obstacle for debt restructuring and credit holiday requests [2].
Kirill Malinovsky, director of Customer Service and Recovery at Bank "Dom.RF", supports this view, noting similar problems in processing applications. Alexander Kulinch from Renaissance Bank explains that financial institutions consider a complex of factors, including economic feasibility for the bank and the current stage of credit delinquency, when deciding to grant a credit holiday [2].
Regional disparities in wage growth and an overall increase in debt burden among borrowers are additional reasons for the increase in demand for credit term easing. The increasing difficulty for borrowers to take advantage of this opportunity has forced them to seek alternative solutions to their debt problems.
Despite the challenges, debt restructuring, including credit holidays, involves changing the terms of a credit agreement in favour of the borrower, allowing for a deferment of payments on consumer loans for up to six months [2]. The text does not provide information on the potential consequences for borrowers or the overall economy due to banks' refusal to restructure credits.
References:
[1] Central Bank of the Russian Federation. (2025). Press Release on the State of the Banking Sector.
[2] Milchkova, N. (2025). The Paradox of Banking: Strict Credit Terms and Increased Demand. Freedom Finance Global.
[3] Central Bank of the Russian Federation. (2025). Statement on Banking Sector Stability.
[4] Russian Federal State Statistics Service. (2025). Economic Indicators: Population Income and Debt Levels.
[5] Kulinch, A. (2025). The Financial Institution's Perspective on Debt Restructuring and Credit Holidays. Renaissance Bank.
The growing financial strain on banks due to increasing non-performing loans and economic challenges has led to a higher rejection rate of debt restructuring and credit holiday applications [1][2]. As a result, the rate of individual bankruptcies has soared by 36% in the first half of 2025 [2]. Moreover, the complexity of the credit restructuring process and the lack of official documentation demonstrating a deteriorated financial status are hindering many borrowers seeking relief from their debt burdens [2].
