Yes, it has come to this … Russia’s banks have become so terrified to loan, that the Central Bank is actually praising the role of pawnshops in saving the country from a full credit freeze with high-interest loans (see AP story below). This of course is choking the life out of small businesses and entrepeneurs, while large, concentrated corporate interests are the only ones who can get liquidity. Time for these banks to gather the courage for smaller, easier loans.
The bank says in its annual report released Wednesday that pawnshops proved to be the only source of credit for many individuals and small companies last year as rates on some bank loans reached 25 percent per month.
Pawnshops typically charge the equivalent of about 15 percent a month.
The Central Bank says the rise in lending by pawnshops had lessened the threat of a full-fledged credit freeze.