The term of unsecured loans may be shortened in Russia

A bill to limit the period for issuing an unsecured loan has been submitted to the lower house of parliament. It is proposed to reduce the term of such loans to five calendar years.

Additionally, the document contains a legal development on changing the procedure for calculating the full cost of a loan product, as well as an obligation for banks not to impose additional services on borrowers.

It was proposed to make an exception for consumer loans, which are provided for the provision of state or regional subsidies.

The explanatory note to the document indicates that it was created to protect borrowers and is necessary to improve the system for calculating the full cost of a consumer loan.  It was also proposed to oblige banks to make settlements depending on the behavior of the borrower when repaying the entire amount in larger or smaller payments.

In addition, the bill proposes the introduction of an obligation for banks to offer an alternative consumer loan in a situation where there is a proposal for additional services when concluding the initial contract.

If the bill is adopted, it will enter into force six months after the date of its official publication.