The Bank of Russia’s Board of Directors has decided to adjust its risk assessment approaches for loans issued to small and medium-sized enterprises (SMEs). Effective January 1, 2025, the threshold for applying the internal ratings-based (IRB) approach without using official financial statements will be raised from ₽50 million to ₽100 million.
In response to current default rates on SME loans, the regulator has increased the minimum provision requirements. For unsecured portfolios of homogeneous loans subject to IRB risk assessment, provisions will rise from 2% to 4%. For other portfolios of homogeneous loans, provisions will increase from 1% to 2%.
This decision aims to alleviate the operational burden on credit institutions while encouraging SME lending with adequate credit risk coverage through a simplified model.
