Kazakhstan to ban loans to low income citizens

NUR-SULTAN – A ban will soon be introduced to prevent low income citizens from getting unsecured loans.

Photo credit: Adilbek Tauyekelov

“The measures providing the ban on giving loans to people with incomes lower than the living wages will be taken by the end of the year,” said Kazakh National Bank Chairperson Erbolat Dossaev, speaking at the government meeting.

The ban on penalty assessments will be accompanied by commissions and other payments on unsecured consumer loans more than 90 days in arrears, he added. The government is also preparing steps aimed at discouraging issuance of unsecured consumer loans, especially to those with low earnings. 

To limit the systemic risks connected with the uncontrolled growth of individual debt burden, state authorities adopted a law in July to include all consumer entities within a regulation perimetre. At the same time, the banks’ total loan portfolio increased 6 percent from April-August to 13.2 trillion tenge ($33 billion).

Domestic banks enhanced their activity in 600 billion tenge ($1.5 billion) priority economic soft loan programmes, said Dossaev.

“Three hundred and forty projects at a total cost 236.7 billion tenge ($607 million) are pending at the banks; 181 projects valued at 130 billion tenge ($333 million) have been approved. One hundred and eighteen loans amounting to 43.2 billion tenge ($111 million) have already been issued and more than 9,000 families obtained credits. The integrated independent valuation of banks’ assets is going on and we are planning to finish it in December,” he added.

In February. the government expects to discuss and adopt individual plans to correct banking actions, which in turn should lead to transparency and enhancing the entire bank sector. 

Bank lending is currently on the rise, according to National Bank data; since the start of the year, financial institutions have provided approximately four trillion tenge ($10 billion) in loans. At the same time, the figures show citizens’ real debt burden. The government previously paid more than 100 billion tenge ($256 million) owed by hundreds of thousands of citizens, after which all financial entities were obliged to check their clients’ solvency.