Russia compensates banks for interest costs in soldiers’ loan scheme

The government of Russia passed a law on Tuesday to reimburse banks that provided loan holidays to soldiers involved in the conflict in Ukraine. Under this legislation, banks will be compensated for 50% of the interest accrued on these loans.

The aim is to support servicemen and their families during their deployment, incentivizing their participation in what the government describes as a “special military operation” in Ukraine.

Legislative Measures in Russia for Financial Support

After President Vladimir Putin’s announcement in September 2022 of the mobilization of 300,000 individuals to bolster the military efforts, the central bank proposed payment holidays. Subsequently, lawmakers in the State Duma, the lower house of parliament in Russia, approved amendments to legislation in the second and third readings.

These amendments entail the reimbursement by the finance ministry of 50% of the interest accrued on loans during the payment holidays.

Under the initial law, servicemen in Russia were granted grace periods on mortgages, consumer loans, and credit card debts for the duration of their service, plus an additional 30 days afterward. The draft legislation still needs approval from the upper house of parliament and President Putin’s signature before becoming law.