Pawnshops Instead of Banks: How an Impoverished russia Is Getting On in 2026

In the first quarter of 2026, the microfinance market in russia provided a classic example of how official statistics can mask a real deterioration in conditions. On the surface, the figures look almost encouraging: the volume of loans issued fell by only 3% year-on-year, to $6.3 billion. But behind this moderate decline there lies a much more complex picture of the debt burden on the population and small businesses.

The main decline occurred in the segment of the most expensive and riskiest products: short-term consumer loans of up to $389 with terms of up to one month. The regulator tightened requirements for assessing borrowers’ creditworthiness and restricted lending to those who are already heavily indebted. At first glance, this looks like a market recovery. In reality, demand hasn’t disappeared – it has simply shifted to other, less transparent channels.

One such channel is microloans to businesses, which grew by 22% to $519.1 million. The lion’s share of these loans went to sole proprietors, while a significant portion of the funding was provided by MFOs established by major marketplaces. This is a telling sign: as the banking and microfinance markets for individuals shrink, entrepreneurs and the self-employed are seeking credit through entities affiliated with e-commerce platforms.

Meanwhile, the total microloan portfolio grew to $10.33 billion – a 16% increase over the year – driven primarily by medium- and long-term loans. However, this growth in volume was accompanied by a significant deterioration in quality: the share of loans more than 90 days past due jumped from 27.5% to 33.8% over the year. In parallel, the market price of non-performing loans fell: the discount when selling them to collection agencies reached 78%, meaning that buyers of such portfolios effectively do not believe it will be possible to recover the majority of these funds.

A telling indicator of the population’s impoverishment was the rapid growth of the pawnshop market. Over the quarter, they concluded 4.9 million contracts, and their total portfolio grew by 35%, to $1.5 billion. The average loan amount increased to $358, partly driven by high gold prices, as russians are increasingly using gold as collateral to get quick cash.