New soft lending rules for agribusiness in Russia come into force
MOSCOW. Jan 9 (Interfax) - New rules for soft lending to agribusinesses have come into force in Russia as of January 1, 2017, according to which agriculture producers will immediately receive subsidized loans at a rate of no more than 5% per year.
According to a government decision signed on December 29, 2016, banks will receive subsidies which give farmers loans at a rate of no more than 5% per year. In this way, shortfalls in income for farmers will be paid for through lending to the agricultural sector. The amount of subsidies will total 100% of the Russian Central Bank's key rate.
According to the rules, subsidies will be provided to consistently major Russian credit organizations, as well as Russian banks approved by the Agriculture Ministry. The criteria used to select banks include capital of at least 20 billion rubles, as well as specialized credit products and programs for agricultural complex organizations.
The system of soft lending which existed in Russia before the new rules came into affect called for farmers being provided with loans at a full rate and then waiting for subsidies which were often delayed for a long time. Borrowers had to spend their own capital to service expensive credits.
"The adopted decision will increase access to lending for agribusinesses and lower the financial burden for agricultural producers," the amendment to the government decision said.