Aggressive credit programs launched to support the economy in the face of Western sanctions imposed after Russia's special military operation against Ukraine have caused a serious risk accumulation in the banking system. As debts taken on by companies and citizens rise rapidly, high interest rates and slowing economic growth make repayments difficult.
Debts reach record levels
Since 2022, the state has expanded subsidized credit programs covering not only the defense industry but also agriculture, small businesses, and import-substituting factories. At the same time, household borrowing was boosted through mortgage incentives. As a result of these policies, corporate debt in Russia increased by 93% compared to 2021 levels, while household debt rose by 57%.
Bankruptcies triple
According to official data, 636,000 Russian citizens filed for personal bankruptcy in 2025. This figure represents more than a threefold increase compared to 197,000 filings in 2021. In the first quarter of 2026, bankruptcy filings rose by 13.7% year-on-year to 137,500.
There was also a significant rise in corporate bankruptcies. According to Fedresurs records, 3,550 companies went bankrupt in the first six months of 2026, a 10.8% increase compared to the same period last year. Micro businesses are particularly struggling; as of April 2026, about 10% of these enterprises with fewer than 15 employees experienced serious difficulties with loan repayments in the past year.
Troubled assets exceed critical threshold
According to a May report by the Moscow-based think tank CMAKP, the total 'troubled assets' held by banks have crossed the 10% 'critical threshold.' The report notes that the crisis is developing covertly because the deterioration in asset quality is masked by the restructuring of delayed loans and the weight of state banks. Ten percent of all bank loans to companies and households amounts to approximately 12 trillion rubles ($153.6 billion).
A European intelligence report cited by Reuters paints a similar picture. The report says that 10% of corporate loans are of 'doubtful' quality, masking an 'explosive situation' for the banking sector. The report concludes that Western governments have the opportunity to impose new sanctions that could plunge Russia into a full-blown banking crisis.
Central Bank continues restructuring
The Russian Central Bank emphasizes that banks are financially sound and have sufficient reserves to weather a potential wave of defaults. In July, banks were instructed to continue restructuring loans for companies experiencing 'temporary difficulties.' Officially, the share of non-performing loans remains around 4%, but analysts note that large borrowers prefer restructuring over outright default, so the real rate could be higher.
Experts say Kremlin may need budget support
Maximilian Hess, a fellow at the Foreign Policy Research Institute, said that a 10% non-performing loan ratio is a significant sign of banking distress by International Monetary Fund standards and will take a long time to recover from. Hess said the Kremlin may have to inject cash into banks by diverting funds from the federal budget or the National Wealth Fund to relieve pressure, which would increase the burden on the budget.
Hess noted that a more serious crisis would only emerge if the West imposes new sanctions restricting Moscow's foreign currency revenues and energy exports to Asian buyers. However, he added that European policymakers are not yet ready to take such steps and that the impact of Ukraine's drone attacks on Russian exports remains unclear.
