March 15, 2024

The Mazhilis approved amendments aimed at minimizing risks in lending and protecting the rights of borrowers

The rules for granting loans to the population are changing significantly in Kazakhstan. They will become more demanding. This is due to the extreme debt burden of the population. The draft law on minimizing risks in lending and protecting the rights of borrowers is being considered in the Mazhilis.

Proposed novelties: What do the deputies propose to do?
1. Introduce a ban on the provision of unsecured consumer loans to citizens if they have overdue loans for more than 90 days. At the same time, this prohibition does not apply to cases of issuing a bank loan in order to repay a loan from an individual on improving terms
2. The concept of consumer credit is being introduced and its maximum value will be limited at the regulatory level (for banks – 5 million tenge, for MFIs – 2 million tenge).
3. It was also proposed that banks and MFIs comply with two mandatory prudential standards that are fixed by law: the debt burden ratio and the debt-to-income ratio of the borrower.
The borrower’s debt burden ratio (CDN) determines which part of the borrower’s income is used to repay debt obligations. This coefficient is calculated as the ratio of the monthly payment amount for all outstanding loans to the average monthly income of the borrower over the past 6 months.
According to the KDN, the monthly payment should not exceed half of the borrower’s official income. The higher this indicator, the lower the citizen’s ability to obtain a loan and the higher the probability that, with financial difficulties, his ability to service debt decreases.
The debt-to-income ratio of the borrower sets the maximum limit on the total debt burden of the borrower for all types of loans. Financial institutions, when issuing a loan, will have to calculate the average net income of the borrower for the year, and apply this coefficient to it based on the age of the person.
About all other innovations proposed by the draft law “On Amendments and Additions to certain legislative acts of the Republic of Kazakhstan on minimizing risks in lending and protecting the rights of borrowers”