Aleksandr Lukashenko meets with Prime Minister Mikhail Myasnikovich and NBRB Chairperson Nadezhda Yermakova

    There are plans to legislate the operation of microfinance organizations in Belarus. The relevant draft decree was discussed at the working meeting of Belarus President Aleksandr Lukashenko, Prime Minister Mikhail Myasnikovich, and Chairwoman of the Board of the National Bank of the Republic of Belarus (NBRB) Nadezhda Yermakova on 28 February.

    Aleksandr Lukashenko noted: “I’ve turned down the draft decree twice and said I needed substantiation for it. I am concerned that in our time we fought a heroic battle against financial companies, they did a lot of damage to the country and could have done even more if we didn’t suppress their operations based on thievery, cash out, pyramid investment schemes and so on”.

    Apart from that, Aleksandr Lukashenko doubted the advisability of passing the decree at all. “You say that these microfinance organizations already operate in Belarus. The question is: do they operate illegally? They must have some legal framework to base their operations on. If they operate legally, why do we need yet another legislative act now?” said the President. “I would like to emphasize it one more time: I am not rejecting what you suggest but I lack information to make the decision”.

    The NBRB head told the President that the initiative to prepare the draft decree had been put forward by the National Bank. Nadezhda Yermakova explained that microfinance business involves lending small sums to individuals and corporations at the expense of the lender’s assets instead of the money deposited by individuals and corporations the way the conventional banks do. The Civil Code allows it but the interpretation is rather unspecific. There are no laws to specifically address this kind of business, she said.

    “Therefore, microfinancing is allowed for any organizations, which are registered as business entities, as economic operators, including small business. There is no legal requirement for licensing this kind of business. Therefore, when the business entities pass registration procedures, compile their charters, they omit this business because it is regulated by the Civil Code. Licensing is needed in order to provide the framework for these operations,” noted the NBRB head.

    According to Nadezhda Yermakova, the lack of proper regulations creates fertile grounds for pyramid investment schemes that take people’s money and just disappear. According to the official, foreign business entities from Russia, as a rule, are now coming to operate in Belarus. They are well established and some of them may have been known for committing frauds, said Nadezhda Yermakova.

    On the other hand, there are microfinance organizations that offer money to Belarusians at punitive interest rates that can be as large as 1000% per annum. People take the money although it is difficult for them to return the money later, noted the NBRB head.

    The discussion led by the head of state resulted in the decision to put more work into the draft decree that is supposed to regulate the operation of microfinance bodies.

    Nadezhda Yermakova noted that it had been suggested that the National Bank should register these organizations and issue licenses. “The National Bank will make sure the organizations have a charter capital, proper interest rates, and will keep punitive penalties lower than the sky. All of that will be regulated,” she said.

    Heads of Belarusian microfinance organizations will also have to meet certain requirements, in particular, proper education, business reputation, and the lack of conviction records.