Financial Institutions Limit Services Provision
Yug Times, Krasnodar, June 6. In the first four months of 2025, Krasnodar Krai saw a whopping 47% decrease in credit card issuance compared to the same period in 2024, with only 201,000 cards being doled out. This significant drop was also noticed in other major regions, such as Samara (-54.8%), Moscow city (-53.5%), and Moscow (-53.3%), Sverdlovsk (-52.6%), and Rostov (-51.7%).
Alexei Volkov, Marketing Director of the National Bureau of Credit Histories, commented, "There's been a plateau in credit card issuance since the second half of last year, but the number of new cards in the January-April period this year is about half that of the same period in the previous year." The Bank of Russia has been enforcing a tight monetary policy to cool down the credit market, and one of the tactics employed includes debt burden ratio restrictions.
Here's a lowdown on what's causing the freeze in new credit card issuance in Russia:
- The Bank of Russia's tight monetary policy has led to regulatory measures being implemented, such as increasing the debt service to income ratio (DSTI) threshold. This forces banks to be more selective when issuing loans and credit cards.
- Banks have become more wary of high-risk borrowers, due to concerns about loan servicing quality. As a result, they are issuing fewer credit cards, especially following the rapid expansion of the credit market in late 2023.
- The market may still be adjusting to the tighter regulatory environment and economic conditions, given that the number of new credit cards issued remains significantly lower compared to the previous year.
- The overall economic situation in Russia has been unstable, with factors like inflation potentially affecting consumer behavior regarding credit card issuance.
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- The tight monetary policy enforced by the Bank of Russia, coupled with the increase in the debt service to income ratio (DSTI) threshold, has encouraged banks to be more selective in issuing credit cards, contributing to the decrease in new card issuance across Russian industries, such as banking and finance, and the business sector.
- Concerns about loan servicing quality have made banks more cautious when issuing credit cards, particularly in the banking-and-insurance industry, which, along with the adjustment to the tighter regulatory environment and the unstable economic situation in Russia, might be causing the ongoing freeze in new credit card issuance in the country.
