loans-for-shares scheme

The loans-for-shares scheme was a process used mainly in Russia during the 1990s, where individuals or entities obtained loans from the government using their shares in state companies as collateral. If they repaid the loan, they kept their shares; if not, the government could seize the shares. This method allowed the government to temporarily raise funds while controlling large stakes in key companies. Over time, many shares ended up owned by a small group of financiers, leading to the emergence of powerful business elites. The scheme played a significant role in the rapid privatization and economic transformation during that period.