ASTANA – Kazakhstan plans to introduce amendments to law on financial market development and consumer protection in financial services to attract foreign financial institutions and increase competition in the banking sector, said Madina Abylkassymova, chairperson of the Agency for Regulation and Development of the Financial Market during an Oct. 16 plenary session in the Mazhilis, the lower house of the Kazakh Parliament.
Madina Abylkassymova. Photo credit: Yelaman Turysbekov/Kazinform
The new draft law reduces the requirements for the assets of a foreign bank from $20 billion to $10 billion. The list of permitted activities will also be expanded with branches being able to conduct currency exchanges, function as transfer agents, and issue payment cards, reported Kazinform.
According to Abylkassymova, the entry of international banks into the Kazakhstan market would result in an increased competition for clients, lower lending rates, and higher foreign investment.
“In terms of interest rates, we expect increased competition among banks to offer various banking services. The base rate, or the country’s inflation rate, is obviously a significant subject. First, if loans are issued in tenge, they will be based on the base rate of the National Bank. However, if loans are issued in foreign currency, they will be based on the base rate of a foreign state. There will be more competition for clients, and we expect that interest rates will definitely be lower on loans,” said Abylkassymova.
She also emphasized that with new players, an increase in lending to small and medium businesses is expected. Almost all international banks in Kazakhstan lend to small and medium-sized enterprises, accounting for nearly 80% of their loan portfolios.
According to Khabar TV channel, the Mazhilis deputies also considered amendments that will affect the protection of consumers of financial services. A three-month loan deferral and even a 50% reduction in monthly payments are provided for socially vulnerable categories of population. Individuals will not face a penalty for repaying a bank loan early. Also, banks’ internal policies will include standards for ensuring a barrier-free environment for individuals with disabilities.
