On October 23, President of Belarus Alexander Lukashenko signed Decree No. 394 "On the Provision and Attraction of Loans". The document is aimed at improving legislation in the sphere of microfinance activities. This will allow for the expansion of microfinance tools for business development and enhance the protection of consumers of such services, the press service of the Belarusian leader informed BELTA.
The Decree approves the procedure for the establishment and operation of non-profit microfinance organizations in the form of consumer cooperatives. To increase the accessibility of microfinance, the list of individuals who can become members of consumer cooperatives for mutual financial assistance has been expanded. These will include individuals engaged in agricultural production, activities subject to a single tax, as well as small and medium-sized enterprises.
The list of activities permitted for pawnshops is also being expanded. They will be granted the right to provide microloans to citizens against the collateral of vehicles without the obligation to transfer the collateral to the pawnshop, to engage in commission trade, to store items, and to acquire them for subsequent sale.
The Decree provides for the possibility of issuing microloans against the collateral of movable property to legal entities, in which the state's ownership share in the charter capital is 50% or more, providing household services to the population and registered in rural areas. This opportunity will also be available to legal entities engaged in the purchase of precious metals and stones for replenishing the State Fund of Precious Metals and Precious Stones.
Concurrently, in order to prevent unfair practices in the provision of microloans and to protect the rights of consumers of these services, the right of non-profit organizations established in the form of foundations to issue such loans has been revoked. This is because, quite often, such organizations provided ultra-short-term unsecured loans at rates exceeding 530% per annum.
The amounts of interest due to the microfinance organization (not exceeding twice the amount of the microloan provided to the borrower), penalties, fines, and late fees (not exceeding half the amount of the microloan) have been limited.