"Call the bank without waiting for delinquency."

The key rate is rising, loans are becoming more expensive, and the Central Bank's financial policy is tightening. All this makes issuing high-risk loans unprofitable. But although banks refuse many clients, the share of people with more than one loan has increased. And even conscientious customers have problems that cause them to default. Izvestia asked Evgeny Novikov, Head of Financial Settlement Department, Vice President of VTB, how they are helped to cope with the situation, what debt relief tools are available and what to do to avoid getting into a debt hole.

- How has Russians' ability to pay on loans changed in general recently? Have there been more debtors and debts?

- We do not see any noticeable growth. On the one hand, the Central Bank has been cooling consumer demand for quite a long time. In this regard, banks are forced to issue loans to customers with the lowest risks. The high-risk segment is leaving lending, so new portfolios, which are formed by banks, are better in quality.

On the other hand, the share of customers with more than one loan increases by ten percent year on year. Accordingly, the level of borrowing is growing, but if clients are of high quality and make timely payments on loans, there is nothing wrong with it.

That is, the Central Bank's measures to cool down the consumer lending market now do not allow high-risk borrowers to get a second or third loan. As a rule, people with a low level of financial literacy and with unformed rules of financial behavior were inclined to take subsequent loans to repay previous ones. They could not calculate in such a way that their real incomes would be enough both for living and servicing obligations. Now the Central Bank limits the issuance of loans to customers with a high credit load. And this is good, because this approach of the regulator gives banks an opportunity to really help people.

Another factor is the correct financial behavior of the client. A basic level of financial literacy allows a person to more or less predict his income and expenses on a six-month/year horizon. But loans are issued for long terms - two or three years and more. That is, in a year and a half or two years the client may default, because it is more difficult to plan for long terms.

- What are the main reasons for loan delinquencies?

- Everyone has delinquencies. A small delay often occurs due to inattention: a person simply forgot to put money on the account in time, the deadline for the next payment has come, but the necessary amount is not available. This is a common situation, in this case the bank contacts the client, and he makes the payment without any sanctions.

But the main reasons are high level of indebtedness, impossibility to pay and various life situations, which in a moment reduce the level of income of the client. For example, the loss of a job or the birth of a child. As we said earlier, not everyone is inclined to long-term financial planning, formation of a safety cushion and a small passive income that would allow to continue to lead a normal life with the same level of income.

Low levels of financial literacy and financial culture are perhaps the unifying attribute of customers who are likely to fall into delinquency in one way or another.

- Are there any programs in the banking market to support borrowers in difficult life situations?

- Yes, there are quite a lot of them. The client may not yet know that he needs support, but the bank is already ready to help settle the debt. There are mandatory government programs to help borrowers that were developed during the pandemic. For example, if a client lost 30% of his income at the moment, he can take advantage of credit vacations and get a six-month deferral of payments according to a certain set of criteria. All banks are obliged to apply these programs at the customer's request.

Each bank has its own programs for each customer segment, like a "Get Deferment" button in the app, if it is a temporary difficulty. For more complex problems, we offer loan restructuring programs. In other words, banks come to the rescue and reduce the amount of the monthly payment, which allows the client to continue servicing the loan.

VTB has a successful pre-approved restructuring program. This is a model developed with the participation of artificial intelligence: it identifies clients who can benefit from restructuring. We offer assistance to such clients proactively: we call them, talk to them, communicate via mobile application or SMS, and tell them about the need and advisability of participating in the program. According to our statistics, more than 85% of clients who use restructuring do not fall into arrears and continue to repay their loans on time.

- Last year we launched another tool to help clients - comprehensive settlement. What is its essence?

- This product was created jointly with other banks. VTB, among others, took an active part in its development.

The essence in brief is as follows. Let's assume that the client has four loans in different banks, and the total payment is conditionally 100 rubles - 25 rubles for each loan. If restructuring is only one bank, the payment is reduced, say, in half - to 12.5 rubles. Accordingly, the client pays not 100 rubles, but 87.5 rubles - the difference is small, and it does not help a person to get out of a difficult situation and debts.

And if the debts are restructured by all four banks, the total payment will be reduced significantly, which will allow the client to restore payment discipline and continue to pay without delays. This is a win-win product for everyone - for both clients and banks.

And last year we and Sber implemented a joint project for our mutual clients and already provide them with debt restructuring service at the same time. The level of re-default for the participants of the program is twice lower than in the case when the bank works only on its own loan.

- What do banks do with those who have no valid reasons for delinquency?

- The bank provides settlement tools regardless of whether there is a valid reason or not. If we see that restructuring will help the client to get out of arrears and continue to make regular payments, we will provide him with this product.

If there are unscrupulous clients who took out a loan without planning to repay it, then there are coercive instruments of settlement: court, enforcement proceedings, bankruptcy. But these are also instruments. For example, bankruptcy closes the client's debts at the expense of his property, and he can start his financial life with a clean slate.

- Do banks have any tools that can prevent customer delinquency?

- It is impossible to prevent delinquencies at all, there is always some level of risk. The most important thing is that the actual risk does not exceed the forecasts.

Banks have a set of different scoring models. They assess risks using a large amount of information about the client in their database or in the credit history bureau. This is a mandatory step that a credit organization goes through before issuing a loan. It provides insight into the payment behavior of the customer.

Plus there are restrictions. For example, after bankruptcy proceedings, no bank will give a client a loan for several years. In principle, the system works, it is balanced. The Central Bank also introduces some new conditions every quarter, which make issuing high-risk loans unprofitable for banks. This both revitalizes the banking system and prevents citizens from lending themselves.

Financial literacy and financial culture is another big layer of work that needs to be done with the population.

What is the difference between financial literacy and financial culture? Our country has a high level of financial literacy in general: people usually know how to behave. Another question is whether they behave? This is already financial culture. Not everyone uses the knowledge in everyday life. Measures to develop financial culture are aimed at the fact that a person automatically, without thinking long enough, uses certain rules of behavior.

- In your opinion, will Russians take out more loans?

- Maybe Russians would like to take more loans, but clients with high credit load will not be able to get them due to the Central Bank's measures to cool down this market. Accordingly, clients will not get loans and will rely on their income.

And it is not reasonable to take a loan for large purchases, such as a car, at such a high interest rate. If you just lack a little, it makes sense. Therefore, we do not forecast such a growth in lending, which we had in the previous few years.

Now banks are offering higher rates on deposits and savings accounts. I recommend you to take a closer look at these offers, because now is a good time to save and receive increased interest on deposits. The high level of the key rate gives banks the opportunity to offer record yields to customers.

- What would you advise clients to avoid getting into a debt hole?

- The main advice is probably simple. If any financial difficulties arise, the first thing to do is to call the bank without waiting for an overdue payment. Specialists will find the best settlement, restructuring, and credit vacation tool that can help get you through the tough times. The bank is even more interested in good payment discipline than the customer himself. This is friend number one.

The rest of the tips are basic. The first is to keep a personal budget. Literally two to four columns: income, expenses, future income, future expenses. This will help you see your finances clearly and understand if there is enough income to cover your expenses.

The second thing is a "safety cushion." You can and should always save, not necessarily large sums. 5% of income is enough. With a "cushion" you can wait out difficult situations.

And the third - do not invest all your savings in buying expensive things, such as a car or an apartment. If there is not enough money, it is better to postpone the purchase to a later date.

And you need to realize that financial obligations, such as loans, should be the first item of expenditure. First we do what we have to do, then we do what we want to do. If you follow this rule, there will be no delinquencies, and there will be money left over for the minimum needs that everyone determines for themselves.