Kazakhstan bans accrual of fines and penalties in case of delay on loans during state of emergency — Agency for Regulation and Development of the Financial Market

Measures to fulfill the instructions of the President Kassym-Jomart Tokayev given on Jan. 11, 2021, in his speech in the Majilis of the Parliament were discussed at the meeting. Chair of the Agency for Regulation and Development of the Financial Market Madina Abylkassymova spoke about the work to ensure the smooth operation of second-tier banks.

“The situation in the banking sector is stable. Banks have a significant stock of equity capital and liquidity to ensure continuous operation and provide a full range of banking services for the population and businesses. The capital adequacy of banks exceeds the minimum requirements by more than 3 times, liquidity also exceeds the regulatory values ​​by more than 4 times,” Abylkassymova said.

Together with the National Bank, work is underway to create an additional reserve of banks' liquidity.

To support the population and business on Jan. 11, 2022, the Agency has adopted an order to grant deferrals of payments on loans to individuals and legal entities affected by the state of emergency. For the period of the state of emergency, a ban on the accrual of fines and penalties in case of delay on loans has been introduced, as well as claims work has been suspended.

To implement the instructions of the Head of State to take specific and urgent measures to regulate consumer lending, the Agency will implement the following measures.

First, as part of the prudential regulation of banks, the requirements for banks' own capital adequacy will be increased by increasing the risk-weighting for consumer loans to individuals.

The calculation of the debt burden ratio itself will be tightened. Income determination criteria that are not reliable evidence of the borrower's regular income will be excluded from the calculation.

As part of the risk-based supervision of banks and microfinance organizations, the introduction of additional restrictions on high-risk consumer loans will also be considered.

Second, within the framework of the mechanism of bankruptcy of individuals being developed by the Government, measures will be taken to resolve problem debts on loans to individuals in banks and microfinance organizations, including those transferred for collection to collectors.

Third, the Agency will additionally tighten the regulation of interest rates on loans to individuals by reducing their limit values, as well as including any commissions and payments from the borrower in the calculation of effective interest rates on loans. This will limit the growth of the population's debt burden on newly issued loans.

According to her, in the implementation of the instructions of the Head of State to limit the unjustified withdrawal of capital from the country, the Agency together with the National Bank and the Financial Monitoring Agency on Jan. 10, 2022, a joint order was adopted to strengthen control measures over cross-border financial transactions.

“A list of suspicious cross-border transactions has been established, as well as the procedure for actions of financial monitoring entities on enhanced customer due diligence measures,” Abylkassymova said.

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