a’s consumers have discovered a lust for spending: in the gleaming new shopping centers around the country clothes, technology and brand-new cars are enticing them to buy.

Private consumption increased by 20 percent in 2006 alone and, together with the elevated income Russia has been receiving from its oil and gas exports, contributed towards last year’s strong economic growth rate of 6.7 percent.

But when Russians’ salaries don’t quite stretch far enough to make a new purchase, private lenders have offered a fast track to owning the latest thing.

In the end, many borrowers find that they do not even have enough money to pay off just the high interest charged on their loans, never mind the core amount they borrowed.

“For some time now, many bankers have had visions of the specter of crisis floating through their ranks,” news magazine Russian Newsweek wrote recently.

Experts warn that bad credit could endanger the liquidity of the whole banking sector in Russia. There are already indications that this is happening, while growth rates in the private-lending sector are on first glance breathtaking: in the last five years alone, private credit has increased twenty fold in Russia.

“Life on tick has become an integral part of the Russian economic model in recent years,” Russian Newsweek writes.

The country’s 142 million citizens have notched up 2 trillion rubles ($76 billion) in debt, according to figures from the Central Bank. Every third Russian has taken out at least one loan.

On average, each borrower takes out 40,000 rubles in credit, compared with an average monthly salary of just 10,000 rubles nationwide.

In the past twelve months, the number of credit that has gone into arrears has tripled, with a total of 33 billion rubles of credit now in default.

There is no easing of the situation in sight. “The risks were accumulated in the past,” Rustam Batashov of Aton-Broker investment bank told Kommersant daily.

The banks have to be much more careful when assessing their customers for credit, Sergei Galkin of MDM Bank said. “But last year, primarily risky credit increased dramatically,” he added.

Murky actual interest rates and the Russian public’s inexperience with borrowing money have exacerbated the problem. Nominal and actual interest rates differ in some cases by four times.

The Central Bank plans to put an end to such practices: from July 1, all credit institutions must publish the actual interest rate, taking into account all incidental charges.

What seems like a step towards fairer competition has been greeted in the banking sector with criticism.

“The aim of some credit institutions is not to minimize the number of defaulted credit, but to maximize their profit in a certain number of the defaults,” analyst Mikhail Matovnikov told Kommersant in reference to the risky game played by the banks.

Even the banking world is now attempting to put the brakes on development with greater checks. The government office that deals with credit affairs has demanded access to data from the passport authorities, Finance Ministry and national pension fund.

The government has also offered help to the hopelessly over borrowed.

According to Russian Newsweek, the Economy Ministry is drafting a law that aims to regulate the private insolvency, which should give some of those in debt the chance for a new start.