Banks cannot open accounts for minors without the approval of their parents.
Heads Rolling: Out with Minors' Banking Without Parental Consent!
In an effort to combat reckless spending among minors, Russia's lawmakers are about to pass a bill in a first reading. This move comes after instances of misuse of debit cards by minors without their legal representatives' consent unfortunately being prevalent.
The Central Bank had recommended in 2021 that credit institutions seek written consent from the legal guardians of minors aged 14 to 18 before opening banking accounts for them. However, the recommendation, issued in an informational letter, did not see consistent compliance across banks.
A recent example of impulsive spending by minors is a headache for the government. In 2024, young people aged 18-19, who are already eligible for credit, faced a troubled trend. Previously reported on our site, the default rate of young credit card holders doubled in a year, potentially reaching over 1 million.
Experts attributed this surge to financial institutions focusing on young adults just entering adulthood due to restrictions on lending to borrowers with high debt loads. Shopping centers turned out to be the hotspots, serving as a contemporary scoring system: "if a teen spends time in a shopping center, then the family likely has money."
VTB explained the increase in defaults by young borrowers taking out two or more loans from various banks.
The Russian government seems to be in support of this legislation, but there's no clear indication yet if they plan to tackle the rising defaults amongst young credit card holders.
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On a broader scale, Russia is grappling with a significant increase in loan defaults, especially among consumer loans. Overdue consumer loans jumped by 22.5% to 610 billion rubles in the first quarter of 2025, with a share increase in the portfolio from 12.4% to 16.1%[1]. High interest rates could be a likely culprit, as the Bank of Russia maintains a key interest rate of 21.00% to manage inflation, which is expected to stay elevated throughout 2025[4]. High-interest rates can make borrowing costlier, escalating default rates among risky borrowers like young individuals.
To tackle this broader issue, the government and financial institutions might concentrate on overall economic strategies such as stabilizing the economy, controlling inflation, and possibly educating financially vulnerable groups.
Speculations suggest the government may implement measures to boost financial literacy, tighten lending criteria for young people, or offer targeted financial assistance programs for this age group. Yet, these measures are speculative, as presently, there is a lack of specific details regarding young credit card holders and their default rates.
- I'm not sure if the government plans to specifically address the rising defaults among young credit card holders, beyond the proposed legislation about banking for minors, as there's no clear indication yet.
- The proposed policy-and-legislation about minors needing parental consent for banking might serve only a portion of the finance-related issues in Russia, as there's a significant increase in loan defaults, especially among consumer loans and young adults.
- The debate over the causes of rising loan defaults in Russia, particularly among young individuals, is not confined solely to the issue of minors and banking; it encompasses broader issues such as general-news topics like financial literacy, tightened lending criteria, and targeted financial assistance programs.
